All Forum Posts by: Shawn Bhatti

 Hey Daniel,

That is great that you have defined your metrics, but as @Ray Hage stated, a turnkey 7.5% cap does not exist in Miami unless you are buying in the really rough parts. $250K a unit is also somewhat realistic in those submarkets, though not impossible.

Your best bet is a value-add strategy on something that has significant upside with a high growth submarket. Your goal should be to have performance cap rates at 7-8% on something with a market cap of 5-6%, which gives you a healthy 200 basis point spread from the going market rate. You'll have to connect with brokers who can help you source these type of deals. Good luck!

 As Adam said, pricing is the biggest issue. It is a moving target and challenging so you aren't the only one dealing with these challenges!

What software are you using to price your rentals these days? 

Couldn't agree more!

Especially in todays' day and age with all the chaos going on in the world.

It's important to have a vivid vision and use that keep yourself going when the going gets tough!

Not necessarily that it is a better return, but rather a better risk adjusted return.

These potential investors know that you are offering a better return, but at what risk? They could get a risk free return by investing in T-bills, so the delta between that RFR and what you're offering needs to be rewarding enough for them to pursue it.

As for the 2nd part of your question, that really is a mystery :)

The low interest rate environment always leads to these folks misleading people and mismatching deal operations, and sometimes even defaulting on the property and losing it altogether.

Probably because a bunch of these syndicators want to be cool Instagram/TikTok influencers and throw up their arms and talk about how many doors they own, but what do I know lol.

Capital has been tight because 10 year treasuries have been hovering around 4% the past few years. Note that they were sub-1% during the COVID era, which is what allowed many delusional syndicators and funds to raise money for properties that were doomed to underperform.

So ask yourself this as if you are in their shoes: you could invest in T-bills to get a guaranteed 4% return, then what is the premium I would require to invest in this person and their commensurate deal? Of course when the risk free rate is sub zero, those with capital are urged to deploy it (allow known as quantitative easing).

Of course there are many other factors like operator experience, specific market, specific deal etc, but generally this is one of the largest factors.

Wow, great post @David Lutz !

Cashflow really is a myth early on and unfortunately most investors do not realize this. I have dealt with many of the same challenges that you have, and that is why it is so important to have sufficient reserves and be extremely conservative (especially in today's environment) when estimating/projecting future cashflow.

I would say this is especially true when buying turnkey properties from a investment service that provides these. They tend to underperform and dazzle you with these sexy projections that rarely turn out to materialize as expected!

 This is reasonable if you execute the brrr strategy, or flip properties and use the proceeds from the flips to buy rentals. Buy 50K alone won't get you to $3000 of monthly net cashflow.

Lot's to consider here. Is the siding mostly intact and not ripped or cracked in multiple spots? If it's in good condition then you won't need to do much with it. However if it is rough and deteriorating/cracking then you might want to budget a high amount for removing it safely (which is not cheap) then residing the entire property.

I'd try to negotiate the price down either way!

Welcome! My biggest advise is to not fall for lower price tag deals. Try to find ideal markets that offer upside while still being at a more affordable price point than southern California for example.

A few good examples are Columbus Ohio and San Antonio Texas, although you'll have to find particular neighborhoods and micro-neighborhoods to consider in whichever market you are looking at.

Don't worry about cash flow in a property that you have to occupy. You'll have to pay rent regardless, so you need to consider that you would already have that expense, along with the fact that you'll get the benefits of principal paydown and asset appreciation (especially by leveraging).

Acquire the asset and perhaps focus on something you can add value to, then you'll have a 100-200K equity chunk to play with in a few years when the market accelerates again. This is how real wealth is built over time.

Cashflow is the long term goal but it just isn't realistic in high growth markets like Austin.