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All Forum Posts by: Account Closed

Account Closed has started 11 posts and replied 613 times.

Post: Multi Family valuations

Account ClosedPosted
  • Professional
  • Brooklyn, NY
  • Posts 624
  • Votes 147
Originally posted by @Gregory Massi:

Hello Bigger Pockets - I am looking at buying this multi family in southern Connecticut and I am having  trouble determining a proper valuation. It is a three unit and is located in a very good area -walkable to stores and train station. Problem is, there have been no three unit sales in that particular area (ie village) in the last year.  Should i base my valuation on duplex/single family sales? I would assume that the price per sqft would be more for a three unit?? this is my first multi so i would appreciate any help. Thank you!

If its less than 4 units, it would be based on comps... so you would need to either get access to the MLS somehow to pull comps or get a realtor in the area to get it done. If that is also not readily available, you can try to comb through websites like zillow, homes.com, realtor.com etc. to find similar properties and price ranges to create your own comps of sorts. There is of course the replacement cost approach. If it were a 5+ unit, you could use the income approach.

Post: CAP rate in the area

Account ClosedPosted
  • Professional
  • Brooklyn, NY
  • Posts 624
  • Votes 147
Originally posted by @Ethan Atkinson:

Call me. I dont have your number saved but thought I did. 10% cap rate is OK. Many of Athens B and C properties are selling for 7-9 caps right now. Seems to be too low for what you are getting and could get with some more marketing and finding "off-market" deals. If it's on the MLS it's probably not a deal in Athens.

 How exactly are you getting 10% cap? Seems high based on prices and rent in area.

Post: CAP rate in the area

Account ClosedPosted
  • Professional
  • Brooklyn, NY
  • Posts 624
  • Votes 147
Originally posted by @Brad E.:

Hey guys. I'm looking at a multi family property here in Athens and am trying to calculate an offer price. There seems to be much online debate on the value of looking at the Cap rate when making a purchase decision. I'm not trying to get into a debate here.

What I am hoping is that someone can share what a decent Cap rate is for this area. I've talked to several agents, about this and other properties, and none seem to be able to tell me what an average/good Cap rate is for the area.

Can anyone here speak to this? Or share with me a good source to find it?

My thought is that an experienced agent/broker would know, so I'm guessing I just haven't found the right person yet.

Any light someone can shed on this will be greatly appreciated.

In the specific area you are trying to buy, you can always calculate the cap rate based on market data - especially if a realtor cant get a number for you. Example: based on current prices and rent in area and assuming 50% expenses, the cap rate seems to be in  4.5% range. If you are told a 10% cap, what exactly is this based on?

Post: Why airbnb can kiss my butt

Account ClosedPosted
  • Professional
  • Brooklyn, NY
  • Posts 624
  • Votes 147
Originally posted by @Michaela G.:

Mike, your condescending attitude that you regularily display, is duly noted.

 I would suggest these as opposed to venting or name calling... negativity tends to attract company but thats probably the left side of my brain talking...

Post: Why airbnb can kiss my butt

Account ClosedPosted
  • Professional
  • Brooklyn, NY
  • Posts 624
  • Votes 147
Originally posted by @Michaela G.:

@mike fletcher...I haven't read all of your posts..

 aww... the plan wasn't to get you more worked up... I can trust airBNB to do that for ya :), they're just built that way... it was however a serious question though... I hear of illegal postings on airBNB exceeding the 80% range in most cases. Typically if I ask an airBNB host if they had just the basic hotel license which is mandatory in many areas, the answer usually is no... I suspect that may also be the case here not just with you but probably just about every other host who responded to your post. Try not to take things too personal on here...tenants, as you may have already experienced, can be a headache :)

Post: The mindset of the Cash Flow investor: LA vs Baltimore

Account ClosedPosted
  • Professional
  • Brooklyn, NY
  • Posts 624
  • Votes 147
 @Matt Mason:

There are different levels of value add projects. If you want to regard cosmetic work as a value add project, great. I guess it is an improvement of some sort so you can technically call it a value add.

By the way, you mentioned you were in or did business somewhere in Beverly Hills corrects? I am aware there are times when zillow can be inaccurate... but do you dispute this as the median value of a home in Beverly Hills?

http://tiny.cc/62wgmy

Post: Cash or Leverage??? Should so use my own money or a Loan broker?

Account ClosedPosted
  • Professional
  • Brooklyn, NY
  • Posts 624
  • Votes 147
Originally posted by @Beverly Joseph:

Hi Guys,

I've recently received quite a bit of money from my equity investments but I'm looking to venture out into real estate.

I have no idea where to begin! I've looked up some information on YouTube and I recently discovered BiggerPockets. It's seems like a very good forum so far! The internet is however loaded with information so I'm a bit confused where to begin.

I'm dedicating the next year to educating myself about Real Estate. I'm looking into purchasing a couple 5-20 unit apartments. My big question is Cash VS Leverage, which is the better way to start?

I've recently quite my job to stay home with my two kids but I really want to get into Real Estate. I also need the ability to generate cash flow. I'm in my mid 30s and ready to do something that will grow my family's wealth even more. Please help?

 This depends on so many factors... what is your budget? That would sort of determine where you can afford to buy a 5 to 20 unit apartment and if to use cash, leverage or both.

Post: 50% rule $800 rents vs $400 rents

Account ClosedPosted
  • Professional
  • Brooklyn, NY
  • Posts 624
  • Votes 147
Originally posted by @Isiee Koch:

Hi, when analyzing multifamily using the 50%rule of thumb, would the same rule apply for 800 dollar rents  like 400 rents? How would that work?

 It is just a general rule for estimating, just like the 1% rule; you however obviously want to get as much as feasibly possible, actual expenses.

Post: Why airbnb can kiss my butt

Account ClosedPosted
  • Professional
  • Brooklyn, NY
  • Posts 624
  • Votes 147
Originally posted by @Michaela G.:

Ok, so I understand that everyone's situation, property, location is different and thus I'm stressing that this was just my own personal experience and I'm over it - after only 2 weeks ;-)

Beginning of the year I decided that I wanted to do airbnb on some properties that I was renovating. I was so excited and read every discussion thread on various websites and joined local airbnb meetup etc. I had so much fun coming up with themes and decorating and finding all of the item to fit the themes etc. and was looking forward to interacting with travelers from all over the world. 

Now, my 3 properties are in a transitional neighborhood, but within a fenced block that is an artist community. We are incredibly central (2 miles from downtown) to everything in Atlanta, that's intown. I have explained that all in my listings, as well as in the welcome email with details of codes etc. 

First I did everything you were supposed to do to get as much exposure as possible: Instant booking , smart pricing . I had a professional photographer. Smart pricing was very low and I think that attracted the people that soured this for me. 1 bedroom apartment for $ 35 and 3 bedroom for $ 65. Well, I went with it, because I knew that I needed good reviews. 

First booking was for 1 week. Person had no prior reviews, told me that he was in between apartments and has several service animals (sorry, but nobody has more than 1 service dog, because it costs about 10K to train one0. I actually allow dogs, so this obvious lie set up a huge red flag for me. I Did some research and found a bunch of evictions for him. His profile says that he's in Missouri, but he's been living in Atlanta for years, so obviously not a traveler. I got really worried, as I didn't want someone that would turn into a squatter and called airbnb and they agreed to cancel the reservation. The guy then threatened to have me thrown off airbnb. 

Had my first guests arrive Friday, 2 weeks ago. It was raining and she texted 'we're here'. I looked out the window and didn't see anyone. Went outside of our compound and see their car further down the road, facing me. I'm standing in the middle of the street, in the pouring rain, waving my arms. There's no way they didn't see me. They turned right, away from me and towards the main street again. I'm running after them, yelling, waving my arms, but they don't stop. They get stuck at the main road, because there are cars and they can't turn. I finally catch up with them and they agree to turn around (only hit me later that they really were leaving and were not lost) . Anyway, I walked them through and then they said that they'd go to dinner. 30 minutes later they called and said that they wouldn't be back. I told them that I'll get them a refund. Was my first guest and I didn't want to start off as a bad host. They cancelled and I made the mistake of after canceling them on my end, thinking that that was the process for them to get their money back. Turns out that I was then being penalized, because this cancellation on my end would have made it impossible for me to become super host for at least a year. I called airbnb and they said 'don't worry, everything's fine'. But I could see on my stats that because of this cancellation I was at 75%, when I would have required 100%. 

2nd guests were awesome. They loved it so much that they came back the 2nd week and rented my other unit. And they just came back for the 3rd time. 

3rd guests was a young couple, that seemed to fit right in. He's a musician, she had dreadlocks and they both worked as bartenders. Both told everyone there how much they loved it. They actually contacted me at 2pm and asked, if they could check in at 3pm. I told them that I didn't expect anyone and would have to clean first and that the unit wouldn't be ready until 5 or 6 earliest. Would that still work for them? They said that that was fine, but would there be any way for them to just stop by at 3 and drop off their stuff and come back at 6? I agreed. So, the boyfriend came with his things and then went into the bedroom and closed the door and stayed. Ok, no big deal, we cleaned the rest of the apartment, as we had had a plumber there earlier. And since these were the first guests in this unit, the sheets were new. 

Being bartenders, they worked nights, so, we didn't see them much. Check out was 10am on July 5th. Sent a message, asking if they had checked out at 10.10. No answer....Tried calling at 10.45...phone turned off. Tried several more times to call..off.  At 11.30 I finally knocked on the door. They had still been sleeping and were clearly upset. I told them that check out was at 10, they insisted that it was 11. I pointed out that it was 11.30 now and that they had still been sleeping and that I had another guest coming at 3pm and needed to clean. I was still on the property when they left around noon. I waved good bye and they didn't acknowledge me.  Got a scathing review how terrible it was and how there was noise all night long and they couldn't sleep and that this was a dangerous neighborhood (I did describe that this is not a neighborhood for walking around in and they didn't have a car and walked around in the middle of the night, coming from their bartending jobs), that I was late and wouldn't let them check in until 6pm, instead of 3pm, that I loudly woke them up at 10am, when check out was at 11 and so on and that they wouldn't recommend anyone to stay here. I had given them a 5* review, because it wasn't such a big deal with the check out - even though in retrospect I Wished I hadn't. Guests in the neighboring unit told me that they didn't come home until 5am, when their dogs loudly welcomed them, so, they hadn't even been there when there was supposedly all of this noise. Besides, even if they had, it was 4th of July and I'm sure there were fireworks and parties all over the U.S. 

I contacted airbnb in tears, told them that I have other airbnb guests that are willing to vouch that these people hadn't been there at the time they claimed and that my email trail through airbnb shows that I told her ahead of time that she couldn't check in at 3pm...they opened a case, but never did anything. 

Then I had this couple with 4 children that booked for 4 days over July 4th. I tried to explain to her that our artist community property is for common use for everyone, but that it's somewhat raw, with walls and places where children could get hurt, if not supervised etc. She said that was fine. Again, the neighborhood was explained in text and email. No problem. 2 days before she writes that they had a death in the family and whether they could cancel. I told her to just go ahead and cancel through airbnb (I had the easiest cancellation policy). Next day the reservation was still there. I asked her to please go ahead and cancel, as I was now in limbo land. She then changed her trip to 2 days. Came on the 3rd. She and her husband walked through the main area of the house and walked back out. She came back and said that her husband didn't like it and they were going to leave. That she had no problem with anything, but that she had only shown him the pictures and he didn't like the area. She wanted a full refund. I said that that really wasn't fair to me, but that she needed to contact airbnb. She never cancelled, so I could never open it up again to anyone else. 

A few days ago she asked for the refund and gave me a scathing review: the pictures must have been 10 years old (were taken 1 week before by a professional photographer, no editing and nothing was changed since) and all of the walls and floors were dirty. That there was a man on the front porch (this is a duplex and I have a painter living in the other unit) that must have been the community bum. That I didn't look like my picture (sorry, but I was cleaning the unit all day and didn't wear make-up and had my hair in a ponytail). 

Then I had some great guests, who didn't write a review, so, I couldn't balance it out. Got a few good or great reviews. 

Yesterday morning I got a letter that said that I was suspended, but that I still needed to host the current reservations and if I got my average back up above 4 stars they would reconsider. I was going to hang in there, but then I got a call from a guest, that had come the night before, who told me that she couldn't stay there, because the lighting wasn't bright enough for her to put on her make-up and that she found a piece of trash under the sofa and why I wouldn't check the place before I let guests in. 

That was it. I sort of had a break-down and called airbnb and told me that I was done. Those past 2 weeks were so stressful. Every guest I was worried that they'd find something wrong. I felt I was being held hostage by potential good or bad reviews. You're not allowed to turn down too many inquires or you get penalized. Almost everyone I booked had no reviews. You can only put a contingency of having had good reviews, if you do instant booking. 

I met every guest myself, even those arriving at midnight. I had water and snacks in the fridge. I walked them through everything and told me to call me if there's anything wrong, missing, even if it's 2am, since I just live 2 blocks away. 

Basically, I feel really relieved today. I'm a great landlord, but I don't want to feel that I'm held hostage by guests like this. This was not for me. But at least I don't have to look back some day and wished that I had.....

 I haven't read through the novel yet :) , but I am just guessing someone is upset.... its like everywhere I turn, airBNB drama....

Just curious by the way... were you in compliance with these with the City of Atlanta? Especially with the hotel and business license & tax?

Land Development Code.

Atlanta’s Land Development Code, Part III of the Code of Ordinances, governs most land use in Atlanta. You should consult Part 16 of the Land Development Code in particular to see if your listing is consistent with any zoning requirements or use definitions. Important terms include “apartment,” “bed and breakfast inn,” dwelling unit,” “family,” “guest house,” “hotel,” “lodging unit,” “roominghouse,” “tourist home.”


Building and Housing Standards. 

Atlanta has rules and regulations specifying minimum construction, design, and maintenance standards for buildings, including regulations on habitability, health, and safety. Certain regulations applicable to residential and non-residential uses may be relevant to your listing, including Appendices A to F of the Land Development Code. You can review these here. For more information, contact the Atlanta Office of Code Compliance.


Hotel License. 

Atlanta requires owners and operators of hotels and similar businesses to apply for and receive a license to operate. The license is issued through the Atlanta Police Department’s License and Permit Unit. Please review Chapter 30, Article XI of the Code of Ordinances, or contact the Police Department or Office of Revenue for more information.


Business License.

Atlanta also generally requires anyone owning or operating a new business to submit an application and pay an annual tax. For new business owners, the City’s Zoning Enforcement Division will verify if the business can exist in its location. You can review rules in Chapter 30, Article III of the Code of Ordinances. A step-by-step summary of the process is available on the Department of Finance’s website.


Taxes. 

Atlanta assesses hotel or motel occupancy taxes on any structure or building that is occupied by guests. Guests qualifying as a “permanent resident,” or guest stays of 30 days or more, are exempt from the tax. More information about the transient occupancy tax is available at the City's municipal code, Chapter 146. Fulton County and the State of Georgia also imposes a hotel or motel also assess a hotel or motel occupancy tax on guest stays of more than 30 days. More information can be found in the County's Tax Code and the State's Tax Code.


Other Rules. 

It's also important to understand and follow other contracts or rules, such as leases, timeshare ownership rules, condo board or co-op rules, HOA rules, or rules established by tenant organizations. Please read your lease agreement and check with your landlord if applicable.

Post: The mindset of the Cash Flow investor: LA vs Baltimore

Account ClosedPosted
  • Professional
  • Brooklyn, NY
  • Posts 624
  • Votes 147
Originally posted by @Brian Ploszay:

I know both of these cities well.   Los Angeles, by the way, is a very large, spread out city.  There are super wealthy areas.  And there are impoverished areas.  That being said, Los Angeles has a built-in factor that favors real estate investment:  scarcity.   Los Angeles has a housing shortage, which is getting more severe.  Why?   The inability to build new housing stock to keep up with the demand.  In most global cities, you build higher density housing.  Los Angeles seems to have enough zoning restrictions that makes it difficult to add more housing stock.

I'll vote Los Angeles.

The city of Baltimore has large sections with serious urban blight.  The real estate seems quite cheap for the East Coast.   I think you get what you pay for.  If you are experienced in low income housing and are local, you can make decent returns.  The repairs and drama might cause you to lose money on the properties.  

Your post says you are from Brooklyn.  Baltimore has the advantage that you can get there fairly easy.  

Last, I just looked at the cap rate for Los Angeles at 3.08%.  Ouch.  That is too low.  I don't like cash flow that is below the rate of borrowing on real estate.  We are in the point of the real estate cycle where investment appreciation is no longer a given.  

You live in Brooklyn.  That area has appreciation potential.  Plus you live there.   Look in your own backyard?

This is good to know... they didnt mention the zoning restrictions when they were talking about all these value add ideas for LA. My obligation always is to deliver the best risk adjusted return on every invested dollar.. so unlike some, emotion influences no part of my decision.. I'll let you guess who's permission I need to decide which markets to invest in.