All Forum Posts by: Nick B.

Quote from @Jessica Harrison:

I would buy small, value-add, commercial deals - 10-15 units in great markets like DFW. 

You need to double or triple that $200K for 10-15 units in DFW

Quote from @Jay Ben:

i see %100-%200 appreciation in these landlord unfriendly states over the course of a decade. What am i missing here?

That appreciation is everywhere. DFW C class apartments were selling around $30K/unit 10 years ago (8% cap rate) but now they are over $100K/unit (5.5% cap rate plus massive rent increase).

Quote from @Jay Ben:

which would you pick? I'm starting to think the best way to build future wealth is investing in better markets at Lower short term yields and high appreciation (nyc, LA etc..) Rather than aiming for deals showing 20 plus IRR.

What are some of your strategies for investing in Low cap markets?

Too broad of a question but here are a few thoughts:
- locations that you mentioned are not landlord-friendly. I'd stay away from them regardless of the cap rate.
- cap rates in the landlord-friendly states are not that different for A and C class. E.g., 4.7% for A and 5.1% for C. If that's the case, I'd prefer A class because of the higher quality tenants and newer physical structures (lower maintenance expenses)
- 20% IRR can be achieved de facto but if someone underwrites for 20% IRR, I'd be very careful. Most likely their assumptions are too optimistic. 

 

Quote from @Carlos Ptriawan:

one thing to add though, whatever decision that you do make sure you execute it after the debt ceiling is over. There's big risk in everything if the  US gov. itself is going for default. Save your cash...

Debt ceiling is a non-event. The Congress will increase it after the usual finger-pointing and mutual accusations.
There may be a period of a "government shutdown" for a week or two when non-essential personnel would be furloughed and financing of some programs put on hold.
That's it until the next debt ceiling dog-and-pony show. 
 

If capital call is optional, I would stay out of it.

I was in a similar situation once before. The sponsors issued a capital call to the tune of 20% of the original equity. Investors refused and the sponsors ended up making a loan to the property out of their pockets. 

Is this a well known syndicator or a first (second, third) timer? How are their other assets performing? 

Here is one in Grapevine, scheduled for tomorrow:

https://www.meetup.com/impactg...

Brokers calculate cap rates based on sales prices and NOIs of the respective properties.

Brokers work for the sellers and have every incentive to inflate the price. Using forward NOI is one of their common tricks.

I wonder how people underwrite when interest rates are close to 6% while cap rates are still barely over 5%.

My common sense tells me that buying for cash is the most feasible option at this point but I am yet to see a sponsor doing that. 

Obviously, there are one-off deals that may trade at 7%+ actual cap rate but I am not talking about those.