All Forum Posts by: Jónas Tryggvi Stefánsson

Thanks a lot Nik!

Hello. I'm Jónas Tryggvi Stefánsson, from the capital region of Iceland.

I'm a computer scientist by trade since 2013, when I obtained my bachelor degree, and work as a software developer in a bank in the capital, Reykjavík.

Ever since I came across the Millionaire Fastlane by MJ Demarco a few years ago I've been fascinated by entrepreneurship and the idea of working hard now for multiple streams of income, automation and eventual passive income as a fruit of the hard labour. I've consumed countless books related to the topic and I've shaped my mind by various sources, while trying to avoid gurus without a track record. 

While I have a nice job I like the idea of not being reliant on it. One of my big goals is to provide a service online for a lot of people, effectively providing a lot of value in exchange for a small fee. 

I intend to implement this plan but I've come across real estate investing as a potential stream on top of the current plan and the current day job.

I'm seriously looking into investing into a duplex, potentially with a friend of mine who's a handyman. We happen to have access to a mentor who's a seasoned veteran in the field and has already taught us a lot. Nothing official has happened yet but these are my first steps and we are actively looking for our first deal.

I've done my fair share of studying in the topic of real estate investing already, as I like to be prepared. I came across the bigger pockets forum after reading Brandon Turner's book on rental property investing. I've also read his book on managing rental properties and watched a couple of PB webinars. Finally I've read the ABCs of real estate investing by Ken McElroy and I'm in the final chapters of Mark Ferguson's "Build a Rental Property Empire".

At last I've analysed a few actual properties to estimate their profitability, I.e. by looking at variables such as the cashflow, CoCROI, debt to income ratio, operating expense ratio and the rent to price ratio to get a grasp of which properties have a potential. 

My problem in the past has been analysis paralysis. I Intend to start implementing. Having a partner who I trust and has skills and the ability to keep me (us) accountable is helping alresdy. The forum is also already helping me in taking the first steps. Thanks a lot so far and hopefully I'll be able to provide some value back in the future.

Cheers!

I'm looking into renting out a bedroom with a private bathroom.

I've done a price comparison and judging by the location, condition and size of the bedroom the ongoing rental rate should be about $840 (rental prices for bedrooms are absurd in my area).

However, that price is not taking into account the private bathroom. Every listing I find on bedrooms, and thereby its prices, is based on a shared bathroom and kitchen with other tenants. 

How much more can I reasonably expect to charge in rent, providing the tenant access to a small private bathroom? At the same time there would not be access to a proper kitchen. 

The bedroom is big enough to support a small functional kitchen area, which will be added (fridge, small stove, microwave) and effectively turning the bedroom into a very small studio apartment.

How much more can I reasonably charge based on this added feature? I've done some searches online and can't seem to find an obvious answer. The room is in an area where not having access to a proper kitchen is not a problem.

Thank you very much in advance! Let me know if more details are needed.

Thanks for clarifying guys. Much appreciated.

When people (or you!) calculate the Cash on Cash Return On Investment (CoCROI) to  compare the profitability of a real estate investment and compare that to other investment options, should it be based on the free cashflow (income - expenses, not including mortgage payments) or the total cashflow (income - expenses, including mortgage payments)?

I thought that when referring to CoCROI one was not supposed to include the mortgage payment but I've seen people such as Brandon do it when comparing an investment to the stock market in one of his YouTube videos.

Thanks! 

Hi. Great thread.

I'm personally stuck in determining whether the investment I have in mind is making sense. I've calculated the CoCROI using the free cash flow (income - expenses, not including mortgage payments) and the total cashflow (income - expenses, including expenses).

Which one is the CoCROI that people are basing their decision on when comparing the returns to other investments, such as the stock market? I feel like both formulas are used as the refereed to CoCROI. I hope I'm referring to the right concepts.

Thank you! 

I'm looking into investing into a specific apartment. It hasn't been publicly listed as for sale yet, I just happen to know the current owner. The owner asked me to do my own research and make him an offer. The owner has a number in mind, but for now he wishes to keep that to himself.

I got two different local realtors to look the apartment up and visit it on-sight with me, to tell me how much they'd value the apartment at, so that I could look into making an offer if it would make sense as a function of loan-payments, maintenance, bills, rental income and so fourth. I've heard that realtors normally don't handle price evaluation but it seems to be the norm where I'm from (Iceland). 

I made it clear that I wanted to know the market-value, not how low I should necessarily offer if I were buying or how high I should sell if I were selling. Both ended up knowing that I were considering buying but I focused on getting to know the market value of the apartment. They happened to give me offer suggestions as-well which were in their recommended market-value ranges anyway.

Realtor A said the apartment should be valued at $162k - 170.6k and that I should make an offer for the lower amount and not accept anything above the upper limit of this range.

Realtor B said the apartment should be valued at $203k - 211.3k.

Both realtors are used to buying and selling houses and apartments in the area. Neither one has any connection to the seller. After the evaluation I told realtor B about Realtor's A evaluation and while he didn't exactly agree with it he did say that I could attempt to make initial offers at Realtor's A range (upper-limit) and see how the seller responds.

How do I determine the actual market value using these very different ranges? Do I need a third valuation? The gap here seems to be quite high. Do I just take the median value? 

The place could be rented from anything between $1381 - $1585 in its current situation. Its unlikely that any deal I can get out of this would go above the 1% rule but it would be possible to get anything from three quarters close up to the percentage in a best case scenario. I'd be taking a mortgage for ~85% of the purchase price. 

I'm a first time investor, just having read the ABCs of real estate investing and I'm going through Brandon Turner's "The book on Rental property investing". I hope you can help me understanding how to go about this gap and perhaps where you'd make your offer knowing these ranges and rental ranges. Thanks! 😊

Don't forget about the taxable event you'd be creating by selling without using the money to buy again.

This is where I would come in and put the mortgage under my name for 20% equity. No money needed on my part.

I'll admit that I'm new to this but what's the catch here? Why are you being given 20% equity for no money down?

Do they not have the credit to take out a bigger mortgage and that's where you come in? Why do they need you involved in the deal but no money?