All Forum Posts by: Obaid M.

@Mark Creason - I  did a drive by and poked in a bit more into the details...you can change that to 4 misrepresentations this week (and like you say it, its only Monday!!)

I was told only 1 of the spaces is not leased and it turns out actually 2 are not leased. Additionally, this is a gross lease situation. Accounting for expenses, taxes, repairs, reserves (assuming 95% occupancy, which it is not), I'm down to 5.7% cap rate, 1.2% Cash on Cash. 

Changed that to 80% occupancy, and very quickly I get into a negative cash flow with only 4.2% Cap rate.

What do you think? Time to negotiate or walk and find some other deal?

@Ray A. - Got the tagging worked out. How But still don't know how to send a PM.

@Mark Creason - Thank you. I'm reposting my response above since now i know how to tag. The property is in Houston but a few miles outside of the loop. My hesitation is that one of lease expires in the near future, and property is currently 80% occupied.

Should I be concerned? What should I look for / what info should I ask for?

Ok - this is probably a very basic question. I'm not able to get tagging to work even when I use @ in front of the name. 

@MrRayA, how do I PM you? I went to your profile and don't see a way to send a message.

@Ray. Thank you @Ray A.

@Mark Creason, the property is in Houston but a few miles outside of the loop. My hesitation is that one of lease expires in the near future, and property is currently 80% occupied. 

Should I be concerned? What should I look for / what info should I ask for?

I'm also a newbie, and kind of amazed you found a deal with such a Cash on Cash + CAP rate. :)

Is this a online listing or a private deal you discovered off-market?

I agree with Mitch - cap rate calculates to 9.4% approx. 

Goodluck!

Hello all, first of all, thank you, thank you and thank you. Over the past few days, I've been reading pages after pages and forum threads on BP and really really appreciate all the expertise, advice and information the community has shared and continues to do so. 

As a starting point, I made up my mind that I want to invest in Houston Suburb of Richmond / Rosenberg residential real estate single family homes, with rents in the $1500 - $1800 range.

Now the question is, should I buy a new home sold by the builder or go for a older home?

I'm trying to find deals, and can't seem to find any - do they just not exist??? 

Example of a new home deal in Richmond, TX that I recently analyzed.

Cost: $209k
Rent: $1800
Expenses: Approx $9155 (insurance, taxes, 5% for vacancies and repairs, HOA Fee)
Management fee: $2160 @ 10% (if I go that route)

The above at 4.5% interest rate, 25 yrs amortization, gives a 4.9% cap rate. 
With management fee included gives a cash on cash return of NEGATIVE -2.8%. (3.1% without the management fee).

The above to me sounds like a horrible investment, yet I see soooo many houses listed for sale and soooo many homes for rent. Which means investors are buying and seeking renters. 

1) As a starter, should I buy a new home sold by the builder or go for a older home?
2) Am I missing something? Is this just the houston market? 
3) Should I negotiate more with the builder? I was hoping atleast I'd get a 10% Cash on Cash (better than the 8% stock market would give).
4) Should I look at commercial deals instead? I've come across one that is 10% CAP rate, but its B class and one of the major leases expires in less than 12 months.

Thank you for reading my lengthy post. I'm trying to make sure by my next move is not a mistake.