All Forum Posts by: Sean Cole

Depends a bit on age and specific neighborhood, but you could be anywhere from $90k-$140k ARV. As @Jered Sturm said, without the specific address, it's hard to pin it down much more than that.

Sometimes folks get Cap(italization) Rates and ROI confused, or use them interchangeably when they aren't interchangeable.

If investors are paying 10% cap rates for buildings like yours, raising rent isn't going to change the cap rate you get, but your ROI will increase and the value of the building will increase due to the higher NOI.

May folks know the quick and dirty way to calculate a cap rate (NOI/value), but not many have seen how to derive a cap rate.  If you want your eyes to bleed, do a Google search for Ellwood's Formula.  Using Ellwood's Formula allows you to determine what cap rate you need based on the financing you have available on your own desired return on equity.  Interesting reading if you're really into math proofs.

Don't worry about it.  You'll get an email from the processor saying that the deposit wasn't in the package, along with a list of any/all other corrections to be made.  You generally get 24 hours to correct all outstanding issues.

@Shawn Holsapple we had an abysmal April... until last week.  We picked up 5 and wholesaled 4 (had 3 others accepted that the AM then pulled from the platform I bought them on).  For us, it seemed less a function of AMs suddenly being ready to dump as it was an slight uptick the week before in properties that we could be aggressive on.  For a few weeks there, it was slim pickings.

Inventory is tightening here, though our customers are still likely getting better yields that you guys are in Vegas. Tight deals here are in the 20%-25% ROI range unless you're in a new neighborhood in one of the most popular suburbs where you might have to go down to 15%. We still find 30%+ ROI deals pretty regularly in B/C suburbs and neighborhoods.

Are you looking to match Omar's strategy or are you looking to flip?

Thank you, @Mike Hartzog.  In the case of a balloon note already a year past maturity, the odds of reinstatement seem awfully low, don't they?

Fortunately or not, I've bought several wholesale deals over the years without being inside first (for a variety of reasons).  We seem to have gotten fairly decent at judging rehab by the exterior appearance, though that's always a risk.

It seems that I'm understanding your post to mean that you only run a DCF as an information piece in the case of redemption and rely nearly 100% on your opinion of the underlying asset's value when determining offer price on an NPN?

First, and maybe most importantly, I'm just getting my education started in the NPN space. With a background in finance, I'm comfortable doing a NPV to price an income stream.

I'm looking at a couple of NPNs right now that are balloon notes, 1 of which has a maturity date in 2017 and the other matured in 2015.  I haven't run an O&E yet to find out if there are junior liens, but I'm most curious about figuring out the appropriate pricing for a past due NPN.  Are you really just looking at the underlying collateral and subtracting your expected foreclosure costs and hassle factor?

Our wholesaling business is successful enough that we have the capital to see if we can buy a few one-offs and be in control of the disposition of the asset.  Perhaps it narrows the pool too far, but I'm initially looking at NPN where we can be all in for less than what I'd be willing to pay for the house in a wholesaling situation.

@Mohammad Sheatt I'm sorry that we couldn't get you into the Deerfield Twp house before it sold.  Have you and Mark spoken about the one in Madeira or Union Twp?  We're expecting a few more this week, as well.

There are great agents in Cincinnati and there are great ones that work with investors.  You'll have more success going directly to the listing agent for a particular property that you're interested in rather than working with your own buyer's agent, in my opinion.  The listing agent will know far more about the property than your own agent could learn quickly and most, unfortunately (whether listing agent or not) don't have any real idea of how to put together a rehab budget.

I hope that we can find you a house shortly.  I know that we'll be all over you knowing that you're looking for something immediately.