All Forum Posts by: Marco Santarelli

Hi Mehran Kamari,

Correction on your calculation. The Capitalization Rate should not be calculated using your debt service. The formula is:

Capitalization Rate = Net Operating Income / Value (or Price)

This will increase your cap rate - which is in line with many Cleveland property.

Also, don't get hung up on this "2% rule". It is a very general guideline and is not always correct. In fact, if you look back a few years there were "gurus" preaching a 1% rule. Stick to your pro-forma as it will be the best guide.

Good luck!

Exactly. Leverage is one of the great advantages of investment real estate!

Cole Palmer

Hi Cole,

One option is to do a "cash out" refi on your first property, however, this will be largely based on the equity to value ratio of your property, and the availability of cash out refinancing options thru lenders.

You'd have to run some numbers, but it might make more sense to leave your first property alone and use your other $40k towards the down payment on a second income property. I have investors in similar situations all the time and we find that it usually makes more sense that way. The exception here is when they have a larger property with equity and they can do a 1031 exchange into a multi-family or small apartment.

Hope that helps.

Continued success!

Find a local hard money lender. That's what they specialize in. You can also visit your local real estate investing (REI) clubs for some potential cash partners.

Good luck!

Well said Edita!

Edita D. Whether the rates are common or not the property should be sealed to prevent them from coming in. It could be an easy fix, but it needs to be addressed or you will find droppings and other "nasties" accumulating which will lead to terrible odors that will drive tenants away - if they weren't scarred already.

From personal experience, rats can take some time to completely eliminate because when they find a warm and dark place, they tend to nest there. That drives the pack bag until you remove those conditions, or block access entirely.

Look into the cost to cure. See if you can negotiate it, or pay it if it's reasonable.

Good luck!

Chris Clothier -- Well said Chris... I was thinking the same thing. If companies like ours didn't fill a need and provide value, we wouldn't be in business.

Make it a great day!

You should always do your due diligence, regardless of what you're buying, as Jon and Will point out. However, be sure to compare apples to apples when it comes to turnkey investments. They are NOT all the same, which is why I am careful to clearly define what that means with other investors.

While it goes without saying that your purchase price will be more buying a true turnkey property over a distressed or wholesale deal (because the work has been done for you); what is not necessarily true is that you will be paying full retail for it. I've purchased many turnkey properties over the years from 5% to 20% below FMV.

These are all things you can easily check and verify!

Continued success.

Hi Jason,

First of all, thanks very much for your service!!

The BP community is a good place to start. There are a lot of good people and good information here.

Of course, you can do a Google search for very specific phrases to target the markets that you're considering.

Aside from that, you may want to Direct Message some of the members on the BP site for suggestions or referrals.

Feel free to contact me with any questions.

Continued success!

Hi Mehran,

I would be more than happy to share the property management company we use in Indianapolis offline with you if you like. We are not affiliated with them, nor do we receive any compensation from them. They do great work on our client's properties and I would be happy to connect you guys.

Continued success!