All Forum Posts by: Sam C.

For tax purposes your would want to start with the basis of the property. Purchase price and all costs associated with the purchase. 

Do you have any numbers on the 4-plex that you can share with us?  

Lesson learned.  I feel for your Dad but sheriff sales/upsets are very tricky and require extreme due diligence. I known a few (very few) people that have been successful at these. Reach out to Joe C. He can help point you in the right direction. 

There are a number of good programs (not apps) to manage the physical structures, tenants, and finances. Our management division uses Buildium. Might not be appropriate for under 50 units but get a good program and it will be able to keep everything separate and easily accessible. 

Part of an article that just came across my desk. 

"Retail and industrial sectors

2017 was a record year for retail, and not in a good way. Last year store closing announcements more than tripled, reaching about 7,000, said retail think tank Fung Global Retail and Technology. Bankruptcies have increased too, with over 600 reported in the retail sector in 2017. The hit list has included big guns like Sears, Kmart, J.C. Penney and Macy’s (store closures) and Toys R Us, Payless, The Limited and Hhgregg (bankruptcy).

And there’s more to come, warned Cushman & Wakefield. The commercial real estate firm said the number of U.S. store closings is expected to jump at least 33% in 2018, to more than 12,000, and forecast that another 25 major retailers could file for bankruptcy. Gap, Banana Republic, J. Crew and Teavana have already announced plans to close stores in 2018.

Walmart has already kicked off the year by shutting down 63 Sam’s Clubs stores – including those at 2425 E. Florence Blvd. in Casa Grande, Arizona; 3360 El Camino Ave. in Sacramento, California; and 5135 S. Dale Mabry Hwy. in Tampa, Florida – even as it attempted to control the news cycle by announcing employee bonuses and an increase in its hourly minimum wage." 

It’s no coincidence that some of the Sam’s Clubs stores belonging to one of Amazon’s biggest rivals will be converted to e-commerce distribution centers. This brings us to a key point about retail trends and their effect on commercial real estate: As e-commerce keeps growing, the retail sector’s need for commercial real estate isn’t disappearing, but rather is shifting as industrial real estate – namely, warehouses and distribution centers – play an ever-bigger role in the retail industry.

Indeed, commercial real estate industry observers like PricewaterhouseCoopers and the Urban Land Institute, which publish an annual report on commercial real estate trends, have singled out the industrial segment as the top-ranked property type for 2018 as well as the previous four years, while Colliers recently found the industrial sector far outperforms all other segments.

@Steve Gesis. I understand what your saying. I hope you're right.

Larry Matson Contracting

APSCO Contracting 

Find a investment property contractor and RE agent ( not to sound sexist but a women with experince working with investors, an eye on home trends and staging skills) to partner with. Sounds like you have everything need but time and experience.

Your values and assumptions seem realistic. Answers:

1. Quality 7+/- cap. Low quality 12+.

2. Maybe. Put it out there anywhere you can reach sellers and see what comes back. Don't limit yourself to wholesalers.  Best deals are in the timing.

3. Overall it's a sellers market for investors. Margins are thin (or even positve cash flow) with any decent property.

4. Go to www.arsrealestate.com. (Disclosurer: I am the broker of the company but do not handle evaluating and contracting new mgt accounts).

5. Vacancy rate: high quality 5% Low 10%

    M/R allowance: 10%

    Expense escalation: 3%

    Rent Escalation: 3-5%

Cap rate part of the purchase calculation.  But I like cash on cash return better. Looking for 6-8% on high quality stable properties and 12-15% on low end-time intensive ones. If sold we like to see min. 20% return after all selling expenses except tax consequences. 

FYI: If your still looking spring 2018, we are building an 8-unit in the LV. Most likely with 50%+ investor money with balance through a local lender. Investment package will be available in about 2-3 months.