All Forum Posts by: Craig Osterloh

Being both a restaurant owner and real estate investor, this is somewhat up my alley. Here are some thoughts:

As a restaurantuer, I LOVE owning my own buildings. I love controlling my own destiny and it gives a bit of 'insurance' against bad times. If they never materialize all the better. Don't know that I would ever sell our buildings. But if they must sell, or must grow...

Seller Lease Back is pretty basic. If it is an established chain, people love to 1031 into these. Two regional chains in my area have chosen to do this. One to raise cash for expansion. The other to raise cash to pay for expansion they shouldn't have done. They are both priced at cap rates in the 7.5 to 7.8 range, with multiple properties available.

Small chains are not always ready to commit to the 20+ year lease back that some of the larger chains are doing. That increases the cap rate.

The real question is how much lease payment is appropriate for the restaurants profit model. Once you know this number, you can almost work back to price with a 7 - 8% cap rate. We pay rent to ourselves on our fully paid property at 7%. That's an old number taken from % rents paid historically. But it seems to work with our profit model.

Hope this was helpful

Mike,

Why do you estimate operating costs at $1250? Is this just a rule of thumb? What costs do you include in that number? Everything outside the financing?

Large deals (1 million +) are usually 16 to 18% plus 4 to 6 points on a 6 month note. I have seen as low as 14% and 4, but that has to be a great deal (60% ltv or less) with lots of backup (your house, your wife, your kids).

Although I've never done any small deals, the one's I have heard about have been scary. 4% per month + 6 points. Of course that was back in the days of the "get rich quick" rush.

What metrics do you find most valuable when choosing an investment?

Of course cash flow is always the first metric I look at, but what about GRM (gross rent multiplier = purchase price/ annual rents)? Cap rate? Others?

I have noticed recently that the GRM for single family homes in the Utah market are coming in way high. 14, 15, and 16. Properties I purchased 8 years ago were 10 on well maintained property! It seems this troubled market is not that troubled. At least when it comes to rental properties.

Wanted to get opinions. Self-manage or hire out? I have done both. Paid about 8%, although that was a few years ago. Currently I pay a manager to handle everything but the accounting. Eliminates alot of the headaches.

In the long term, my analysis says that the ROI using an management firm vrs self managing was about a 1% difference. A 12% after tax return vrs a 13%. Am I way off base?

I'd like to buy a home in Japan. Rent it for about 15 years and then keep it for personal use. My wife is Japanese. Anyone with any experience in this area?

I intend on doing more buying in the next year. Currently I have 4 conventional mortgages. I believe they are Frannie backed. I can consolidate them all down to one, giving me three more frannie backed mortgages available.

My question: what are my options using commercial financing? Why would I want to do commercial vrs frannie? How will the rates compare?

Hello all,

Just found this site, and very impressed. I have been looking for something like this for a while.

Introductions. I am a small business owner from Utah. I have been a Real Estate investor as a side business for a number of years. Residential, commercial and raw land. Tend to buy more than I sell. I currently own a number of rental homes and am looking to increase my portfolio. I have also been considering whether I should do large multi unit. I have also been looking at acquiring raw land developments just prior to recording.

My approach has always been to buy and hold. I am looking for long term growth. I believe the current market holds great risk but great opportunity.

I have studied real estate investing, but still consider myself a novice. So much to learn.

The next few years promise to be interesting to say the least.

Sorry for the long intro. See you on the forums

If you can visually inspect the foundation at the point the water is entering, you can get a better idea of what is going on. Looking for florescence (white calcium deposits left behind from the water coming throught the foundation wall) it will give you a target to start with.

I have a friend who is a local dealer for a product called Zipex. The use it to seal concrete. He used the product to seal a basement that was leaking hundreds of gallons an hour while it was still leaking. Liked it so much he bought the local distributer. Just google Zipex and see what you find.

Another product I have used in my own building was Damit. We had a leak problem for years and haven't had a drop since we applied the damit. Goes on with a roller. This was before I heard about Zipex. Haven't had a need to try the Zipex, but my friend swears by it.