All Forum Posts by: Mike Henson

I am looking for a way to allow a renter to use bill pay to automatically pay rent without exposing my account information.  I am hoping someone can point me to a reliable, and preferably free way to accommodate bill pay for rental payments.

If average CAP rates for an area indicate that a property appears to be waaaay under valued based on rental income, my assumption it does not guarantee a smart deal right? Otherwise why would someone sell it?

For example:

2 unit property (duplex) 

1. - asking $26.9k; 
2. - current rental income $12k (estimated); 
3. - CAP rate = 22% (using 50% rule to estimate NOI)

Approximate CAP rate for area is ~9% which tells me the property's value is (should be) $66,666 based on these numbers.

Other than actual numbers, CAP rates, and obvious market risk factors e.g. area is a war zone or the roof is covered with a tarp etc., what factors or metrics are "essential" to making a smart multi-family real estate investment decision?

Again, MANY thanks in advance for your guidance!

I am just beginning my research into investing in rental properties as a way to augment  retirement income and have a few (hopefully) simple questions as follows:

1. Generally, when stating a "per door" income, what are you deducting from the rent to come up with this number?

2. The "2% Rule" says that per month rent should be equal to 2% of the sale price.  Is this legitimately attainable or an exception to the norm?  When I find a property that meets that criteria it is almost always in a (fairly) depressed area.  However, I wonder if a property meets the 2% rule, is it always (or almost always) a good investment given the goal of passive income?

3. Are capitalization rates subjective assessments or pure math (NOI/sale price)? Should the cap rate be a part of my analysis and if so, how is the best way to think about it in my market in metro-St. Louis, in Madison County Illinois?

Any help is greatly appreciated.  Thanks in advance!

Mike