All Forum Posts by: Joseph High

@Jordyn Rodriguez 

The big question that I want to know is how are they making their money? Are they going to nickel and dime you for every little thing that they do, what is the value that the provide by managing your property?

That's a broad thing, but specific questions that I would ask are:

Do they charge lease renewal fees? 

What is their fee structure? Do they only have one plan, or do they offer a variety of plans? 

Are they a licensed brokerage, or are they only property managers? Do they have an incentive to add to your portfolio, or only to keep it? 

What are their systems in place for screening tenants?

How spread out is the portfolio of properties that they currently manage?  

Happy to answer any other questions that you might have!

@Alex Theriault

After taking a quick look, these are the immediate rental comps (26th St & Eccles Ave) that I found based on square footage and bedrooms/bathrooms. Based on these, you're looking closer to $3,150 in rent for the property. Which is a pretty big difference than the $4,470 you had originally. That now puts you at $787.50 a unit. As an important note, I am evaluating this deal on a per unit basis rather than by looking at the whole property.

 Intuitively, that rental number is supported by the discounted rate the tenants are paying. I think that it is more realistic to lower the rent by $112.50 ($787.5 - $675 = $112.50) than it does to lower it by $442.50 ($1117.50 - $675) for the services rendered.

Additionally, let's say the property gets appraised for the sales price of 370k. Appraisals and sales price aren't always the same, but for the sake of being conservative, let's say that's the case. The taxable amount in Utah is 45% of the appraised value (370k) which equals 166,500. $166,500 * the tax rate (0.01591%) equals $2649.01. $2649.01/48 (per unit & per month) is $55 a unit in taxes per month. Previously it had been $37.50 ($1800/48). So you have conservatively increased your taxes by 33% (55-37.5 = 12.5 and 12.5/37.5 = 33%)

That's not to mention the expected CapEx and repairs on the property. It was built in 1948, so more than likely you will have higher maintenance costs than if you were to have a newer property. With that in mind, when were the last CapEx repairs done? Looking at the picture, it seems like the property has been updated, but unsure about the most recent renovations.

At first glance, the numbers look really good on this property, and you're doing the right thing by doing a thorough analysis first. It seems like you're on the right track with your own investigation. Looking forward to hearing what you decide to do!

@Allison Mahoney It depends on what area you are purchasing in. How close they are to Nashville's wide range of attractions will help determine what they are looking for in a rental property. 

@Daisy Ferreiras Congrats! Glad to hear that the appraisal came in so strongly. Looking forward to hearing what's next! 

Excited to be attending! Looking forward to connecting with y'all. I live in the Nashville area so feel free to reach out to me for any tips or advice on things to do while you're here! 

Looking forward to meeting you guys there! I'm working as an investment analyst for a property management company and am working on building up enough cash to get into my first deal.

@Ryan Hall

It depends on what your strategy is. Here in Nashville (this is not a 100% analogous example) brand new construction for multi-family units is extremely expensive. It is very difficult for those properties to cash flow. However, the appreciation is very good for those properties.

As I'm sure you're aware of, there's more than one way to make money in real estate. You've got cash flow, tax shelter, appreciation, and loan amortization. So, even though the cash flow on this property isn't great, is there another way you can make money on this property? Since it's located next to a university, do you think there will be above average appreciation when you sell the property? Is the equity you're building up worth more than just having that cash sit in your bank account for less than 2% APY (if you're lucky)? 

From a cash flow perspective, it's not a great investment, but what are comps in your area cash flowing at? You said this was the best property you've come across in 3 months. As a point of reference, we're looking for a minimum 6% cash on cash return in Nashville investments. 

Another thing to consider is that the building is 12 years old. A general rule of thumb is that you replace your HVAC system every 10-15 years and then the roof every 15 years. Not sure if the CAPEX expense was budgeted for those specific line items or just general CAPEX, but thought I'd put that on your radar. Since the cash flow is tight, and one of those systems goes out, do you have the reserves to fix it?

@Antonio Cucciniello

You're right - I've heard lots of investors say that the best deals are all off market. Which is tough to hear when the deals that are on the market aren't that great. However, as others as have said before, it's a numbers game for the stuff that is listed.

The ones that I've found have come from just driving around areas that I would like to invest in. My boss and I found a group of town homes on our way to a showing that we had scheduled. They've flown under the radar and have had minimal activity. 

The off market deals that I've found have 2 big things in common - they're in great locations, and the owner(s) have held the property for a decently long time. 

@Marcos Flores

In August, 43.7% of all home sales in Nashville were under 300k. The median home price is 316k. Homes 600k and over were only 10.4% of total sales for August.  You're operating on a different price point than where a decent amount of activity is taking place (this is from Chandler Reports). Even at the lower price points, buyers are becoming pickier. Sellers are having to do more remediation than before, days on market has continued to go up.  

To the comments above, I'm going to disagree. Looking over growth since 2011 (this is available at Nashville Realtors Market Data) there has been a definite deceleration in growth. So far in 2019, there has not been any metrics of double digit YoY growth in median home prices/closings or condo closings. That is the first time since 2011 that there hasn't been double YoY growth in the above metrics. 

@Ryan Proffit

I was driving around near where I live, and I saw this row of duplexes. Every single one had cars parked in front and it looked like the exterior maintenance was taken care of.

Looked them up in the MLS and started running rent/sales comps on them. One was just recently bought/renovated.