All Forum Posts by: Jon A.

 Yeah. Question should be rephrased as cash flow vs. equity. I don't know any investor who banks on or factors appreciation into his or her numbers. But at the end of the day we're all trying to acquire equity bc equity can always be converted into cash flow. Lots of investments throw off cash. The beauty of real estate is wealth creation.

 I didn't realize that you hadn't included your mortgage payment in the numbers you provided. I'm not familiar wthe calculators on this site. I have my own way of running numbers, and I never really factor in principal pay down and some of these other numbers; I personally view them as dessert, not the heart of the meal.

WRT your original question, one easy way to make this deal look so much better is to self manage.. seems like that will make you cash flow positive.

 I agree with this. I say this as someone who lives and invests in NYC. It's always most efficient to invest in the market you live in. And though there are people here who seem to go for turnkey properties, that seems the most risky to me. You've added no value, created no equity. You're just hoping for market timing really. Just my opinion.

 Same way, say, the very large banks manage X number of bank branches--
that is, they do it poorly but have so much scale it makes little
difference to their bottom line.

Very interesting post and I think you make a number of excellent points. The one piece i think is missing, unless i missed it in your post, is the Fed. Imo in the next 12 months the Fed will either cause a recession or solve inflation. In the former scenario, the Fed will be forced to cut rates and mortgage rates will likely drop substantially. In the latter scenario, long term rates will likely drop but more moderately, as the mortgage market seemed to have priced in long term inflation. Either way, potential drop in rates in 12 months would potentially mitigate the 12-18 month scenario you described. Who knows what will happen. Just my two cents.

I wouldn't recommend putting too much stock in an appraisal. Appraising is an art, not a science...I often get multiple appraisals at once and find that values can vary by more than 20% depending on arbitrary decisions made by each appraiser. If you've looked at the comps and can't figure out value, how can you expect someone else to?