All Forum Posts by: Nate Watkins

@Jay Hinrichs Sorry. I was just going by memory when I lived there. Of course, this was Portland. 

Yeah that's a 3.3% effective rate. It's still really hard to compare from state to state because of all sorts of other taxes. For example, property tax in Oregon is really high, but there are no consumer sales taxes. Some states don't have income taxes as well.

For what it's worth, in Atlanta I pay about 2.5% effective sales tax on my primary residence.

The assessment ratio varies widely by state. To compare different states you have to compute both the assessment ratio and the millage rate. So in this case, the effective tax rate is 1%. In Georgia the same house may have similar taxes, but will look like this:

50,000 FMV
40% assessment ratio
20,000 assessed value
2.5% millage rate
$500 taxes

In Alabama it might look like this:

50,000 FMV
20% assessment ratio
10,000 assessed value
5% millage rate
$500 in taxes 

For a quick cheat multiply the millage rate by the assessment ratio and you'll get the effective tax rate and can use that to estimate taxes. 

As for investment property, there are all sorts of variations based on homestead exemptions.

I wouldn't start any work on the basement until you know the market will value the finish. Many people overdo the basements and later discover it's a superadequacy for the local market.

Might be worth checking out the new tablet apps that allow signatures on digital contracts. 

Depends on what local cap rates are at, and what local sales prices per unit are at. Reasonably (a 7-8% cap rate) you could expect a sales price in the mid 600k's to low 700k's based on current income. If you're sure you could be all in for less than 800k (after renovations), this looks like a solid deal. 

Just be very diligent in ensuring those rents are legit. A lot of times properties will be leased with X rental rates, but economic vacancy will be really high. This is the real vacancy, including delinquency. 

It's hard to analyze this without knowing what NOI is. With a typical 50% PGR - NOI ratio, that produces a 6% cap rate on this income stream. I'd be curious what comps are trading at in the area. That's pretty low.

Hey guys. I've been listening to the podcasts for a while, and thought I'd stop by and introduce myself. I have about 10 years of experience in commercial real estate valuation and consulting, primarily in retail and multifamily. Recently I've been investing on my own with friends and clients. Looking to branch out even more into the investment world, especially since I have so much data at my disposal. Hopefully I'll be able to make some more contacts here. 

Thanks

Tax credits are provided in order to justify the section 8 housing restrictions. You'd have to look through the documents to see how many years the contract is for, what the rent limitations are, etc.

Something seems very wrong with these figures. $900 in rent in CA? 

The 260k per unit purchase price seems reasonable, absent any other information about the property condition. At a 6% cap rate it's an NOI of $126,000, divided by 50% (to gross up the potential income) is $252,000. Divide that number by 8 (units) and by 12 (months) and you end up with rents ~$2,600 per month. Now THAT sounds more like CA rental rates. Until you can figure out the real issue with the rents, nothing in the price will make sense.

PS - EGI is already taking vacancy into account. The 50% rule of thumb would be double counting vacancy. If the appraiser used a market derived expense ratio it's either because the owner has garbage income/expense data or they aren't running it properly and an underwriter would want to see what it would look like as a market deal.