All Forum Posts by: Account Closed

Re: why estimating - I like doing this with new listings so I can quickly get a sense of the financials when the data's not immediately available.

Thanks

OK, but what I'm wondering if whether that estimate of expenses (divide by two) incorporates mortgage interest or not - it makes a fairly big difference.

Hi all, a long time ago I read of a simple way to estimate the cap rate on a property, divide the gross rents in half then divide by the value or asking price on the property.

I'm curious, estimating expenses as half of gross rents, does that incorporate mortgage interest? Or should that be further deducted in order to come up with a reasonable estimate if you're taking out a mortgage on the property?

Also curious how well this estimate fares in your guys' experience in terms of accuracy?

Thanks

Thanks, right now I'm focusing on 8-25 or so unit properties, but was going to start looking at smaller stuff like duplexes too. A local broker I've been speaking with seems pretty strongly focused on the importance of personal finances (including income) even with larger investment properties, he has a lot of experience so I'm not sure if that's just his personal experience or what.

Originally I was planning to stop working after getting my savings invested in rental RE though at this point it's looking like that plan might need to be modified as it seems like securing loans a few years down the line wouldn't work. Is it reasonably possible to obtain a mortgage for a multifamily (apartment complex) if all your income is rental income? I just ran some numbers and even with a well-performing property, in that scenario - while you're still holding the mortgage - your debt-to-income ratio is through the roof.

It seems like no bank would either give you a loan on a new property or a 2nd loan on an existing one, meaning you would need to buy and hold, and then move up to a larger property w/ financing after the original mortgages are paid off. Additionally it seems like too much of a risk to get into larger properties where you'd need to secure a new loan in 5 years, and instead should focus on SFHs/duplexes/etc. Thoughts? Anyone have experience w/ this?

Hi - I've been looking at commercial RE (multifamilies) for a while now and originally was going to wait to take time off until after getting everything invested, but I realize that will probably take longer than I thought. Essentially I'm self-employed and work from home, been doing it for a long time, am sick of it and want to shut it down. I've saved enough $ such that living off the rental income would be easy (once invested), and in the meantime, I don't spend much $ so this wouldn't effect my finances much.

Essentially I was wondering how this might affect my ability to get a loan? Obviously if I stop working now, this wouldn't be reflected on my tax returns for a year or two, though I'm guessing it would come into play somewhere.

Thanks, via this thread I've connected w/ Joel, and plan to give him a call this coming week. In general though, when looking at ads and calling brokers associated with the property, it's been very hit and miss, and so far, 100% miss.

Thanks, I've included responses below:

>>Where are you trying to buy it (state,location)??

I'm looking throughout the US, I don't have a specific location in mind. Lately I've been doing a lot of searching via Loopnet.

>>How did you arrive at the 400k to 550k range??

Based the fact that I want some diversification (not fully invested into one building), and with a 20% down payment, I could afford 2-3 buildings in this price range.

>>How much cash do you have to purchase an apartment building??

Right now I'd be looking to invest ~$250,000, but not all at once.

>>Are you looking at 4 units or less or a larger complex??

Generally larger complexes

>>Are you looking for totally vacant and rehab and flip,semi-performing with value add,fully performing with value add,or topped out fully performing in nicer areas with lower risk??

Something I could get financing on, so I'd want to see a reasonable occupancy rate (maybe 80%-85%+) and a solid current cash flow. Value add properties I would definitely consider, though I wouldn't want to buy a building then immediately put down a $50-$100k capital investment - I'd prefer something performing decently well as it is, really with or without a lot of value add potential.

Also, I want to avoid bad neighborhoods.

If you'd be interested in working with me (as you're a broker), feel free to message me.

Thanks

I've started looking at what's available in my price range over the past few weeks ($400k-$550k), and currently my main road block is finding reliable brokers/agents. Two didn't even bother to return my calls, while two more which I spoke with over the phone still haven't emailed me a basic profit/loss sheet which I had asked for. Is this level of unreliability normal? I've shopped for single family homes before and everyone I dealt with was extremely professional and responsive. Any tips on finding someone reliable and professional for commercial RE?

Thanks, Dave