All Forum Posts by: Peter Amico

@Ben Wilkins and @Andy Crooks Thanks for the insights. Very helpful. 

Hi all- 

I am looking at a 14 unit property and here is a link to the listing. (http://www.loopnet.com/Listing/20404304/415-e-Magn...)

This is more of an academic exercise as I am currently buying 3/2 SFRs, but I want to think about how to value multi-unit apartment buildings. However, here is how I think about it and wondered if others had more advice on a better way to value the property. 

Property appears to have quite a bit of deferred maintenance and the capital expenditures over the past few years seem to bear that out as well. 

Asking price: 1.1 million

-14 units (mix of mostly 2/1.5s). You can see unit mix at link. Gross Rents= 104K

-Taxes= 8,700 in 2016

-Insurance- 13,500

-Repairs/Maintenance (6%)- 6,200

-Capital Expenditure more in early years (10%)- 10,400

-Management (8%)- 8,320

-Water/Garbage- 4,250

-Debt Financing (assuming 20% down)- 880k/20 year/5%- 70k- Should this be different assumptions? I dont know much about term/rates on commercial loans. 

-NOI= 104k- 8700-13,500- 6,200- 8,320- 4,250= 63,030

-Cash Flow Before Tax- 63,030- 70k- 10,400k (capex) = -17,400k 

-Cap Rate= 63,030/1.1 million= 5.73%

Am I evaluating this correctly, or am I totally missing something? I cant see any world where this property cash flows at anywhere close to the asking price? For cap rate of 9%, the price comes down to 700k. I think I can make those numbers work. Then debt financing goes to 44k.  So Cash flow before tax goes to 63030- 44k-10,400 (capex)= 8,630. I would still not be wild about this deal at those numbers. That means 140k of my money is returning, before tax, 8,630 (6%). Also, that is at a much lower price than the asking price. What types of cap rate should I be looking for on  these types of properties? Do these not cash flow well? Any feedback is welcome. What am I missing here? 

@Ahmed Souissi thanks for your note. Can you send me some of the example properties you bought?

Cross-posting this from general forum. 

Hi BP experts- I have been listening to the podcast for a few months now and am learning lots. I am a current investor and working on trying to figure out my next steps. We moved to Orlando, FL a year ago from Boston and I had been slowly acquiring 3/2 single families in Vero Beach (where I grew up) which is about 1.5 hours from Orlando. I self-manage these. I work (w-2) 4 days a week doing economic research at a well paid gig. I like the 3/2s with families and I have had very low turnover which makes them easy to manage.

Here is a bit of background on my portfolio.

Market: Vero Beach, FL

1) Own free and clear 3 - 3/2 SFRs with approximate value of 120k each. I am currently selling on of these for 121k

2) Financed- 30yr ~5% 2- 3/2 SFRs with values of 85k and 130k; both have about 20% down.

Market: Orlando, FL

1) Purchased a 3/1 SFR at auction with a business partner and will flip this house in next 3 months. Total cash in 103k + expected 15k return.

Market: Dallas, TX

1) Just joined a syndication for a 244 unit apartment complex as a limited partner- 50k. Money is tied up for 5 years with expected IRR of 18%.

My question: I am struggling to understand what my next steps are. I have a lot of equity in my current homes (~400k in Vero and 120k in the Orlando flip). I am expecting to get 100k out of the house I am selling in the next few moths after fees and to get the 120k out of the Orlando flip. My focus has been 3/2 SFRs in Vero Beach, but I want to buy properties in Orlando now in my market. The 3/2s are now much more expensive than previously and hard to find 1% deals. I am also interested in duplexes, and larger, but I also think it is important to stay focused and I really understand the 3/2 market well. I would also like to leverage my funds to do some bigger deals (potential 220k available soon puts me around 1 million property and could cash out refinance the others for even more).

My goals are to scale up to about 100k post tax profit from the properties. Right now, I am probably at about 35k after tax. I want this to be semi-passive, but not just dumping it all in a syndication or REITS.

In one scenario, I would buy 5 more 3/2 SFRs in Orlando market in next year and continue to slowly build my portfolio. I am ok with making this a larger portion of my time, if necessary. However, my question is what are my options? What am I not considering? Any ideas for how to scale quickly? Is it a bad idea to move to different properties (non SFR) where I am less of an expert? How can I best leverage all my equity/cash?

From your perspective, how would you proceed? 

Appreciate any thoughts. 

@Andrew Ashby I'd love to see those as well.

Hi BP experts- I have been listening to the podcast for a few months now and am learning lots. I am a current investor and working on trying to figure out my next steps. We moved to Orlando, FL a year ago from Boston and I had been slowly acquiring 3/2 single families in Vero Beach (where I grew up) which is about 1.5 hours from Orlando. I self-manage these. I work (w-2) 4 days a week doing economic research at a well paid gig. I like the 3/2s with families and I have had very low turnover which makes them easy to manage.

Here is a bit of background on my portfolio. 

Market: Vero Beach, FL

1) Own free and clear 3 - 3/2 SFRs with approximate value of 120k each. I am currently selling on of these for 121k

2) Financed- 30yr ~5% 2- 3/2 SFRs with values of 85k and 130k; both have about 20% down. 

Market: Orlando, FL

1) Purchased a 3/1 SFR at auction with a business partner and will flip this house in next 3 months. Total cash in 103k + expected 15k return.

Market: Dallas, TX

1) Just joined a syndication for a 244 unit apartment complex as a limited partner- 50k. Money is tied up for 5 years with expected IRR of 18%.

My question: I am struggling to understand what my next steps are. I have a lot of equity in my current homes (~400k in Vero and 120k in the Orlando flip). I am expecting to get 100k out of the house I am selling in the next few moths after fees and to get the 120k out of the Orlando flip. My focus has been 3/2 SFRs in Vero Beach, but I want to buy properties in Orlando now in my market. The 3/2s are now much more expensive than previously and hard to find 1% deals. I am also interested in duplexes, and larger, but I also think it is important to stay focused and I really understand the 3/2 market well. I would also like to leverage my funds to do some bigger deals (potential 220k available soon puts me around 1 million property and could cash out refinance the others for even more). 

My goals are to scale up to about 100k post tax profit from the properties. Right now, I am probably at about 35k after tax. I want this to be semi-passive, but not just dumping it all in a syndication or REITS. 

In one scenario, I would buy 5 more 3/2 SFRs in Orlando market in next year and continue to slowly build my portfolio. I am ok with making this a larger portion of my time, if necessary. However, my question is what are my options? What am I not considering? Any ideas for how to scale quickly? Is it a bad idea to move to different properties (non SFR) where I am less of an expert? How can I best leverage all my equity/cash?

Appreciate any thoughts.