All Forum Posts by: Matt Popilek

@William J Stratton Jr. - Bigger Pockets in the tool section has a proforma you can utilize to calculate your return requirements. CoC is equal to the amount of Cash you are putting into the deal divided by the amount of Cash Flow a property brings after all expenses. You put in $10k you total annual income is $1000 (after all expenses) you are getting a 10% CoC.

Multifamily is 100% in the numbers. Figure out what your return requirements are, and stick to that no matter what! Say I want 12% CoC or more for example...then my offer always starts below the 12% and work my way back up to the 12% never to pass that threshold. You need to take into account all the cost to renovate the property in your purchase price. You can figure off actual income and expense today, and build a proforma based on renovation cost, and future rental income after renovation. That being said your goal is a certain return no matter what if the property doesn't accomplish that goal you move to the next one. Getting laser focused on the type of returns you want will help you evaluate property much quicker as well.

If it was me I would pass. I am not jumping through all the effort and hoops at a As-Is 7%cap rate when I also have to renovate to bring the property up. 7 cap should be turn key as far as I am concerned. I would tell you to start pulling data for off market deals and find a 10%cap rate with out all the hair this one presents.

Unfortunately I don't have an answer but I will follow to see if you get the answer as this is an interesting option.

Great Story! Love the Tree House AirBnB, I love the idea! Hope you have great success in your first investment properties!

A student of mine recently bought a duplex in Pittsburg for $1500. Not exactly the same market but close in comparison. If your going to be a REI your goal is to make wise purchases that give great returns. That way if something changes in the market your not put in a bad situation.

@brandon Constantine- I think you can find a better deal if you keep looking.

Yes you can pay them after the sale if they will allow you to. This is purely a negotiation between you and the lender.  I usually pay mine a flat rate...so for instance the one I am doing now I have a guarantee 10% so he lends 100k I pay him 10k after the sale. If I sell in 2 months he kills it...if I sell in 12 months it is really no different than lending at 10%.  Again all of this is negotiable so work to get the best deal possible with out upsetting the lender. You want to remember the long game is to keep the lender happy so they want to lend to you again.  I would say don't nickle and dime the lender as they will find someone else to lend to, and then you will be back to square 1 finding another lender.

@Mike Reynolds Don't be messing with my dream ;) I can handle a flurry or two and long as the temp averages 60+ which it seems like that is the case from everything I have seen...I will put up with 60 :)  Connect with me on FB and what not so we can stay in touch. I will be building my second business down there and keeping KC moving as well.

I am probably just an echo at this point. I think you are missing a few key metrics in cost. I would include at lease 15% maintenance expense off your Gross Rents, 10% Vacancy cost, Property Tax, and Insurance.  I ready you are pricing Management that will probably be 10% roughly of Gross Rents. So if the Gross Rents are $2700 - deduct $405 for maintenance, $270 for Vacancy and $270 for PM that is an additional cost of $954/month. You could maybe drop the maintenance to 14% the vacancy to 7% and PM to 8% depending on your area those deductions may work.  Based on the numbers you provided you are buying this at a 7.7% cap rate which in my book is not something I would buy. I am looking for 10% cap rates or better.  If you are going to live in this building and just rent 2 of the units it may not be a bad purchase as long as there is a good path to increase rents, and appreciation on the property.