All Forum Posts by: Kaleb Dodson

My partners and I currently have a potential rental property under contract that just so happens to be roughly 3 hours away from our primary location. There are no pictures of the inside, so the seller agreed that we would sign an agreement and have 7 days to get out there and do our due diligence. Any advice on hiring someone to get photos of the property or should we just suck it up and go ourselves?

0 Votes

Richmond, Virginia

Quote from @Wayne Brooks:

Your cap rate, in my mind, should be based on your NOI verses your All In acquisition costs....purchase price, closing costs, and repair costs to get it rent ready......otherwise you're kidding yourself.

I like to think of it like this:

You want to know how much money the property will net each month and compare it to all of the money you've thrown into it. Thus, including the repairs is a must, as well as closing costs.

0 Votes

Quote from @Jeff Copeland:

Debt service is not an operating expense, so those should not be used at all when calculating cap rate.

$2600 x 12 = $31,200 Potential Gross Income

Less Vacancy/Collection Losses of 5% = $29,640 Effective Gross Income

$1250/mo = $15000/yr in Operating Expenses

$29640 EGI -$15,000 OE = $14,640 Net Operating Income

$14640 NOI divided by $280k purchase price = 5.22% Cap Rate

Put another way, if you invest $280k in this property, you will see a 5.22% annual return. $280k x 5.22% = $14616

(the other $24 is just a rounding error from not carrying out the decimals)

There is literally no other correct way to calculate cap rate.

https://www.biggerpockets.com/...

If i intend to make some repairs on the property, would the capital costs then be the price I bought the home for PLUS the cost of the repairs? I keep seeing calculators just use the purchase price.

0 Votes

Quote from @Jim Pellerin:

Quote from @Kaleb Dodson:

Hello everyone!

My partner and I would love to get more information concerning gathering operating expenses information for a potential rental deal. I've heard of the trailing twelve, and I know you can just ask for that from the seller. What I am wanting to know is, how can i get really quick information to evaluate pursuing a rental opportunity without the need to know what the taxes, insurance, water, trash, and etc expenses are?

Ex. When figuring out the capitalization rate, you need to know the annual Net Operating Income (NOI), which requires knowing all of the above I mentioned before.

Please correct me if I'm making this more difficult than it needs to be.

THANK!

@Kaleb Dodson Here are a couple of ways.

1, The easiest way is to just ask the seller what the NOI is and then calculate the Cap Rate. You can always validate the numbers during due diligence. This is based on actuals.

2. If you don't want to do that you can use estimates. Estimate the average rents in the area for similar properties. Just google it for estimates Then estimate operational costs at 35% to 45% of rents. Then calculate NOI = gross rents - operational costs.

This was very helpful. Thank you!

0 Votes

Richmond, Virginia

Quote from @Justin Miller:

Hey Caleb, BiggerPockets has great calculator tools to help with that, but if you’ve already used up your 6 free tries I would recommend downloading the DealCheck app. I just downloaded it and it is SUPER helpful in analyzing deals. It will even give you rent estimates.

I've got 3 more to go before I have to sign up. I'll check that app out. Thank you!

0 Votes

Richmond, Virginia

Hello everyone!

Ex. When figuring out the capitalization rate, you need to know the annual Net Operating Income (NOI), which requires knowing all of the above I mentioned before.

Please correct me if I'm making this more difficult than it needs to be.

THANK!

1 Vote

Richmond, Virginia

Quote from @Chris Seveney:

@Kaleb Dodson

If you are in a non judicial state then search for auction companies and if you are in a judicial state call the sheriffs office to see if and when they handle sales

Typically done on same day each month - like first Tuesday…

Chris, my business primarily focuses in Virginia.

0 Votes

Little Rock, Arkansas

Hello all,

My name is Kaleb, co-owner of CK Acquisitions here in VA. We are brand new, and hoping to connect with more investors and potentially pass on deals to them and vice versa. Would love any suggestions on meetups, events, and more so our team can build your trust.

Thanks!

0 Votes

Richmond, Virginia

Hello again guys,

I was wondering how I can find out about courthouse auctions so I can build relationships with cash buyers. Everything I'm finding is online auctions, which totally kills my opportunity to actually get out here and meet some amazing investors. Any idea of how I can find where these auctions take place in person would be amazing!

Thanks!

0 Votes

Little Rock, Arkansas

Quote from @Chris Seveney:

@Kaleb Dodson

We use textline for texting and keap for crm

Keap does have a texting feature.

I'll look more into these. Going to settle on one today and start my first round.

0 Votes

Little Rock, Arkansas

All Forum Posts by: Kaleb Dodson

Kaleb Dodson has started 10 posts and replied 24 times.

Post: Getting pictures of a property 2 1/2 hrs away from us

Post: Cap rate-include repair cost?

Post: How do you calculate NOI and Cap Rate? Fun Exercise

Post: How to quickly evaluate a rental?

Post: How to quickly evaluate a rental?

Post: How to quickly evaluate a rental?

Post: In-person Auctions and where to find them to meet investors

Post: Looking to build out our local network of Investors

Post: In-person Auctions and where to find them to meet investors

Post: Tools for Mass Text/Email/VM