All Forum Posts by: Joe Ebanks

Nice work! looks great!

Curious what you did to the fireplace to make it look so much better...

Im considering using auction.com

Should I have a lawyer or a title company look at the titles of the properties I'm going to bid on, before I bid? 

Im looking at a foreclosed house in a good city. I have never rehabbed a house before. Based off comps (and also was appraised in 2012 for 97,500) I think its pretty likely to be worth about 105 currently. 

I am not quite sure how much I want to put into the home, the carpet looks pretty nasty so I was thinking vinyl planks for the whole thing. Potentially opening up a wall and redoing the kitchen to get higher rent... and possibly making the bathroom better as well. 

What I was thinking is that doing all that will at least increase the value of what I spent right? Unless I overpay... or terrible work is done..

So basically I can just ignore the after repair value, and base my buying price off of what it appraised at and the comps out there, so I would be able to purchase at 73500.

I guess seeing the math the improvements would have to improve the value more than they cost. Is that reasonable?

@mathew king Thanks a lot for your opinion! Really appreciate it!

Hi all. Im looking at a 12 unit apartment complex for sale near where I live. The owner recently passed away and the heirs had it appraised and are selling it now. It has 11 units occupied and 1 unit vacant for showings (may or may not be true). 

The appraisal used an 8.5% cap for the income capitalization analysis. Is there a database where I can find out how much apartment buildings are selling for in my market? That would be incredibly useful. If not, how do all of you crushers go about doing that? Talking with brokers?  Im curious specifically about the North East Ohio Market. But if there is some sort of national database I would love to know about that too.

My problem is this. It was appraised 'AS IS' at 490k. To me it looks like they just used an estimated NOI, and divided this by the market cap (actually just 6 comps which may or may not be very similar, I think the amount of work needed could vary greatly...) to figure out the appraisal value. The actual NOI was less than the estimated one used in the appraisal. And the 3 year actual NOI was quite a bit less. This may be because the owner was older and wasnt focused on maximizing this. The agent said it was because people moved out and they had to rehab the units. The expenses were much bigger in 2013-2014. Also a higher vacancy rate so it makes sense. To do my numbers I was averaging the 3 years out to get the actual 3 year NOI, much lower than the appraisals.

Also, there is a very old driveway that needs completely redone. The agent said they got an estimate at 40k. I dont think a 40k driveway will increase the NOI that much :). Also the furnaces, and AC, were mostly 20 years old. The electrical is at least that old, and likely the plumbing too. Again I dont think they increase the NOI by as much as they will take away from it...

Were all of these expenditures really taken into account by the 'AS IS' appraisal? The comps said nothing about how much Cap Ex was needed in the near future. Just the property was in 'good' or 'ok' condition. 

I think that I should be subtracting the estimated Cap Ex from the purchase price. The agent did not agree and the sellers do not think so either. They were asking for more than the appraisal already, and I bid a number significantly lower. I took into account all the updates, and very conservative estimates for NOI to protect myself as Im new to this.

It is unlikely we will be able to make a deal here, but Im just wondering if I am thinking about it correctly or not.

I guess lastly, when bidding a property like this... Would it be smarter to offer closer to the appraisal value? Then when I have it professionally inspected, and get contractors through the place to give estimates on the upgrades, and lifespan's of current HVAC/plumbing/electrical, negotiate the price down at that point or walk? Can you get your earnest money back in this situation?

 Thanks!

Hi, 

I am quite new to this. I have some capital but am taking my time to research and make good investments. I could certainly use an agent who knows what they're doing and doesnt just want to make an easy sale. 

I am looking to invest in cash-flowing multi's and have no experience doing this. It will take a lot of research and time before I'm ready, but maybe someone can help me learn and speed this process up. SFH in north east ohio are fair game too. Looking for a good cash flow/investment rate.

Thanks!

I guess my subject should be : estimating repair costs.. haha

I found a house that is in terrible shape. I think I can get it for very cheap. The property alone is probably worth what I will pay for the house. It needs just about everything to be done that a house could possibly need. I'm specifically worried about:

I found mold in the basement. I believe it is sandstone. I'm not positive. There was green mold all over this stuff. Also found crackings in the stone. It was painted over with something to hold the water in (maybe making it worse?) as I peeled that off the stone crumbled. Also on the outside I noticed they covered this stuff up. So its hard to see just how bad it is. I'm unsure what the solution is and how much that would cost. 

2nd big problem on the first floor the roof has a hole in it. They added a dropdown roof (purely to hide the damage i think) which is in bad shape. No idea what needs to be done. All the house was carpeted and the floors were wooden. I dont think the floor/ceiling needs major work but really i dont know. 

The HVAC was very old, water heater very old. Windows very old. Probably terribly inefficient. 

The roof did not have any leaks but from the attic I could see the insulation was all quite old (surprise). 

Overall its a small house, on a small property. But I can get it for really cheap, and after fixing it up I think I could get 3 solid bedrooms to produce at least 1k/month total. Its in a nice college town.

This will be my first fix up so I really dont know what to even do and certainly dont know how much that will cost! I'd like to learn to fix these things myself and am planning on getting onto youtube to find out. If anyone can help me estimate the capex here that would be great! 

I'm not sure if I can get away with not fixing all the windows, not replacing the hold HVAC, and stuff like that. What do you guys think? 

Thanks a lot Linval! great links! 

I'm just starting out and looking to get into buy and holds. I'm finding it hard to find properties that meet the 2% rule. I also see a ton of rental's in my area. I'm worried I may buy and not be able to rent it out due to too much competition. For instance theres a city near me that just built a ton of new stores that look really great. They are trying to renew the area and I think it will work. I was just looking at houses to purchase there. However driving around I saw an absolute ton of multi family rentals... Is there a good way to guage high rental demand? thanks