All Forum Posts by: Justin Brown

Hey @Raymond Y. pumped you're looking to invest in Allentown! Paying all cash makes things a lot simpler for sure and sellers like that. You also have a lot of single family row homes that you can pick up around 50K that are in great shape. I helped a client sell a SFH last month that made great cash flow. Here it is contrasted with a duplex in bethlehem.

SFH: 53K purchase price and 850 rent, 

After taxes, Insurance, management, maintenance, trash and vacancy your looking at 483 a month cash flow. 10% cash on cash return.

https://www.biggerpockets.com/calculators/shared/799536/883374da-28f1-4c6c-8db3-66a54da2a19c

MFH: 95K offer with 45% down probably could raise rents a little to get 1400/month 

After all the expenses plus the debt service you're looking at 528 a month cash flow with 12% cash on cash

https://www.biggerpockets.com/calculators/shared/799536/92455a43-f803-4687-a155-214530dc54d1

MFH: 95K offer with 20% down drops you to 401 a month cash flow, but you only used 26K giving you 18% cash on cash return leaving you with 24K to go buy another place... 

https://www.biggerpockets.com/calculators/shared/799536/37e0d7d1-2628-4c90-9978-7af38635110d

Depends a lot on your goals. You could always pay cash on the first place, get things stable and then pull out a chunk of your money for the next one. Hope this helps! 

Its all about the money right!  I think you're exactly right, who cares what the cap rate is if its making you the money you want. Cash flow, and cash on cash return I think are much better metrics. As a realtor I see people all the time like to inflate the cap rate anyway so I ignore it and just move to calculating the expenses and what it ends up cash flowing. 

Great last name @Sarah Brown looking forward to meeting you! Your working in a great area for filps! I would be happy to prep some good market analysis and we can definitely discuss peoples perspective on some of the other great topics you mentioned!  

So if your maxed out with saving you need to start looking at how to make more money but not in a way thats going to leave you in a hole that will be too big to get out of. I think house flipping is very risky and time consuming. Take those same hours and do something else that makes you money by the hour thats going right into the bank. Then before you know it you will have capital to work with and you can find a duplex for your family to move into and stop renting and get a little cash flow. Then you can take the next step and the next etc. Keep up the good work! Don't settle, and write down your goals each day so that you can keep what your working for in clear view! 

Thats a good way to describe it too @Account Closed  but from a marketing standpoint its going to be hard to get someone to buy your property if you don't show a good cap rate compared to other properties in your market. 

Hey Bill, 

https://www.biggerpockets.com/blogs/4704/47953-how-to-grow-your-business-with-bigger-pockets-and-other-social-media @James Wise writes the above article, and touches on the benifits of the pro account... check it out! Thought I don't know the answer to your Plus question. 

Hey @Nick Mauldin! CAP rate is a bench mark for judging dissimilar properties, and for telling you how well its performing based on the cost of the property. The higher rate doesn't relate to risk necessarily but can help get you in the ball park on if you want to analyse a property further. CAP rate is short for capitalization rate, meaning how long till you pay off the asset cost with the net income. So lets say for easy numbers...I have a two unit property that would cost me 100K that is making me a net income of 10K a year and a 3 unit that was 200K and was making me 16K a year.

1.) 10,000/100,000 -> .10 -> 10% cap rate, or ten years to capitalize on my investment. 

2.) 16,000/200,000 -> .08 -> 8% cap rate, 12.5 years to capitalize on my investment. 

So though the two options are a lot different I can quickly see that the first option is a better cap rate even though its less cash flow. At this point it really depends on what your investment strategy is. Some people don't care about cap rate and want to look at the cash flow per door, or cash on cash return. But its still a good tool for at least giving you a 30,000 view to get you in the ball park on if this is something you want to look at. You can also use this to see what is normal for your area on what is a good deal or not. I know in some places they wont touch something unless its a 10% cap rate, in other areas they would jump at 6%. Any folks want to jump in on that part of the discussion? 

Good luck Nick! 

JB. 

Hey Steve, so your main question is should you try to leverage the fact that you have a good amount of land to work with or invest your money somewhere else? Did you get an idea of the costs of re-zoning? How much was the house? I have never heard of just the house being for sale, unless its a mobile home situation.  

Whats the context? Got a link? 

Hey @Philippe Benhamou I'm in the process of reading through @Scott Trench book, Set for Life right now and I love his concept of getting set up on the right runway. Looks like with being a family man trying to make more money you would want to start with the first step of saving your way rapidly to an emergency fund of 1-2K and 25K hard cash to work with. What type of field do you currently work in?  What are your investment goals? Maybe you have some time outside of work and family to get yourself plugged into a work related to where you want to invest. Meaning take your real estate license class, help a buddy who is a contractor on the weekends, etc.