All Forum Posts by: John L.

@Oleg Shalumov makes a very good point. 

Generally, I wouldn't base value on Airbnb rental rates.  Underwrite to a standard monthly rental and if you can then make Airbnb work on top of that it can be a bonus. 

@Frank Bonzai I would ignore the cap rate in an initial discussion.  Ideally, you are really looking for particular cash on cash returns that are more dependent on the business plan than the specific cap rate. For example, a seller might very well sell at a 7 cap but if there are operational efficiencies you can take advantage of upon your acquisition, it might not be a 7 cap. 

I would describe the property you're interested in with more specifics like size, unit mix, class etc and go from there. 

@Nathan Coldsmith as @Charles Soper mentioned, financing would be a challenge with those vacancy numbers so I would be reluctant to do so unless you really feel like the tenants are problematic. You could probably still solve the problem yourself without resorting to evicting everyone. 

The main point I would add is to check neighboring properties and how the market handles utilities. Some markets  standardize on owner paid utilities so prospective tenants expect it and the change could make it hard to compete.

I agree that your question needs to be clarified. 

Generally, I like Keith Weinhold’s explanation of how real estate makes money:  https://www.getricheducation.com/5-ways-youre-paid-real-estate-investing/

@Johnoson Crutchfield other than using cash flow, other options are to refinance or take on some other financing. You would have to talk to your current lender or possibly some hard money lenders to get specifics. In any case you would need detailed plans for the renovation budget, rental increase, ARV, and a clear picture how the money would boost the property value. Ideally you can perform the upgrades and then refinance to pull out cash and repay the money spent rehabbing.

@Stephen D. Ken McElroy’s books might be of interest: https://www.kenmcelroy.com/books.

@Andrew Caldieraro I would go to a local rei meetup near you. You will likely find others doing the same or even the operators of such brokerages.

@Michael P. It sounds like the loan you're referencing for commercial properties (30-year amortization) relies on agency debt, where the loan balance would likely need to be over $1M.   

I would call some local lenders and see what they would recommend for 5 or so units. If you have a sample property they'll be able to advise more specifically. 

Hi @Josh Levan,

Cincinnati metro as well as Indianapolis, Lexington, and Louisville are all good markets. I would refer to market reports from M&M, Yardi, C&W, CBRE etc for general market info. Most of these brokers also offer the option to subscribe to new listings. These are usually focused on larger properties. I would look on MLS and LoopNet for other properties to sample the market. This can also point you to active brokers that can provide more info.

I agree with others here. 

Review the raw numbers —  the current rents and occupancy would not cover the debt service, taxes, and expenses.