All Forum Posts by: Scott Jones

I live in Chicago and actually used to live in RPV and worked in Malaga Cove in PV. Although I invest in Indiana I agree with the previous posts. Your expenses seem light. With that property vacancy and turnover costs I could see potentially adding up as well. Nick Patterson regarding his current structure and his math of putting down $15k and returning $3k and change for the year of cash flow is a great cap rate. Now it seems we all agree this won't be the true cap rate but what are your targets on deals? Let's assume he could get at least 6%-8% which I would think doesn't justify the risk for this type of property but still beats a lot of stocks when just looking at a div. I'm not disagreeing with you but curious what numbers you target in an acquisition. Scott

@Frank JiangI agree with you. It certainly makes the investor get a deeper understanding of the overall deal. My thoughts are at least running an IRR model you can see what 10 years out even looks like. Agree that it doesn't have to be IRR but it seems you and I are on the same page of the value we find in it. Even if an investment is 10 years there still should be some idea of what that exit strategy looks like at the very least what the debt schedule looks like at different amortization periods. I also agree with you on the NPV. The one area that I guess I find some value in it is if you are in fact setting a discount rate to get an idea of how much more or less you can pay on a deal to achieve those results. Again with this as you pointed out is the complexity of being correct on a exit valuation so depending how far out you go the less confident you can be. I built the models so time wise is quick but I mainly focus on IRR.

@Jeff B.

I'm new to the site and have been able to read through a lot of discussions and articles written which I feel give good advice about analyzing deals. I love seeing others lend advice to newer investors. I see the 2% and 50% rule mentioned all over which is a good general rule to follow but by no means the end all be all. I have yet to read anything about informing new investors about IRR and NPV. In my business these numbers are the cornerstone to any deal I'm looking at. Each property is different in that I can accept a smaller or larger IRR depending on the overall risk entailed with the property, but none the less is still a main driver. Since REI (buy and hold) can be a long term investment for many (5,10,15+ years) I believe it's imperative that you factor in time value of money into any analysis. Understanding how NPV works is crucialI and I feel it should be a large factor if you move forward with a deal or not. Again the deal should be thoroughly analyzed for cost and risk factors but can really help you decide the price you should pay today for the cash stream.

My style of investing is focused on a balance between cash flow and debt repayment. I keep adequate cash reserves and really try to have my renters pay down much of the debt. I don't do 30 yr mortgages as the less interest I have to pay a bank is more cash in my pocket on the sale. Cash flow is great, but just one part of the overall equation in the deal when bringing a lender into the deal.  Just my thoughts and everyone has a different style but I'm surprised I dont hear more about these two important numbers that should be factored in. As anyone else wondered this?

My name is Scott Jones and I have been investing in real estate for the last 5 years and come from a finance background. I currently live in Chicago but my company is located in and buys real estate in Indiana. Currently focused in the town of Lafayette (where I grew up) but am looking to expand to other IN markets this year to continue to grow the business. I have started to learn the Chicago markets for potential future deals, but my comfort zone is still in Indiana (plus real estate taxes are much lower!) I started my career in 2008 in Los Angeles where I lived and found deals for flippers during the collapse. I learned a lot over that time and started flipping my own properties in 2011. The market had gotten more competitive and margins squeezed and in 2013 moved back to the midwest to pursue new opportunities. Interested in rental properties I created a partnership in Q3 2014 to start building a rental portfolio. The company has done well and has started out 2016 with two new acquisitions. I am looking to expand into new markets this year to further diversify the holdings. I love real estate investing. Everything from running models to redesigning a kitchen or bath. I still have plenty to learn, but am seeing my hardwork in the my early years paying off. Looking forward to connecting with other investors, discussing issues and ideas, and potentially finding new acquisitions. 

Best

Scott