All Forum Posts by: Michael Wolffs

I'm about to do this.  You'll probably get your money back pretty quick up in Kingston.  Get the annual oil expense on any property you look at.

$15,000 on a $3.6 million dollar deal isn't going to move the needle much.  Unless you're RIGHT on your necessary yield threshold, it shouldn't make that much difference.  

One issue would be what terms the seller wants.  Don't give up on your due diligence contingency, et al. 

I should be there.

I'm in the process of rehabbing/reconfiguring a property.   I got names of contractors from various sources (here, other websites, brokers, other local sources.)  They've been to the property, and I'm now getting back bids.  I'll probably take the two best looking bids (not necessarily the cheapest, but a combination of price and professionalism), and run them through the mill.  The question is, what would be the best vetting procedure.  I know the following:

• Get license #s, and insurance info for the contractor and subs.
• Get references and call.
• Check with the state to validate the licenses
• Web search.  I joined Angie's List, which has so far proven worthless.

What else?

Thanks for any feedback.

Faye,

Have you determined what the market cap rate is for similar properties in the area?  A lot will also depend on how the project will be financed, and how expensive the financing will be.

I'm not to that point yet.  I was just running the numbers on a listing I was sent.  In the market I'm working in (Northern NJ) a 7 cap is considered good.  I also see some possibility to push the rents.

In point of fact, I'm being more reactive than proactive here.  I should be pounding the pavement if I'm really looking for deals.  I'm in the process of getting my current deal rehabbed, and I would like to get that done before buying something else.  But this is going slowly, so the concept of a day 1 cash flowing property has some draw.

They/re giving the NOI, so you don't have to make any expense assumptions. The cap rate based on that NOI is 7.28. That's not great, but not terrible either. It really depends on the market.

Yes, but that presents something of a catch 22.  You really can't get real numbers until you get under contract, and into due diligence, where you can demand real paperwork.  Pre-contract, all you have is what the seller is representing.

Of course, you can clearly state that your basing your bid on the fact that the numbers the seller is supplying are real.  If they turn out not to be, you'll adjust your bid based on the real numbers, or walk away.

My own, fairly simple, calculations.  The listing has their pro forma numbers.  Eight units, 52,500 net on 83,500 gross.  Asking 750,000.  I calculated on 725,000.  Assumed 5% rate on 30 year amortization.

A broker sends me a constant stream of listings off of the NJ MLS system for the areas property I'm interested. Most are immediate discards, but occasionally one catches my eye. One did today.

I did a quick calculation of cash on cash return, based on the pro-forma numbers in the listing (and, yes, I know these would have to be confirmed in due diligence.)  Assuming a 5% interest rate, I get about a 9% return.  

This seems a little thin, but it's way better than any other kind of income investment right now.  There may be room for rent improvement, but it might be a bit tough for a few reasons.

What do you consider a minimum viable return?