All Forum Posts by: Peter Aziz

Thanks, @Andrew Syrios. Excited to be here.

Thanks for the illustration, @Jeff B.. The only downside I see with this approach is the potential to be upside down on the sale assuming your illustration holds true (however unlikely it may be). Let me explain:

Let's assume you acquire a $100K building today at a 5% CR. A 5% CR works when rates are 3%. 

Now, let's assume that by year 5 interest rates are at the illustrated 8%. Investors will require much higher CRs. Assume that investors will now require a 10%CR, now you're sitting on a building with a FMV of only $50K (assuming rents/expenses did not increase, which again is unlikely). If you put 20-25% into this deal at acquisition, you wouldn't be in a position to sell at a profit - the inverse holds true - you'd sell at a loss. Am I missing something?

Agreed that Cash on Cash ("COC") is a better metric in assessing your investment. Question for NA Beard - what is the best way to approach COC returns when one takes out an ARM on a commercial multi-residential property? I know what my COC is on day 1 and I can reasonably forecast COC (during the fixed time of my ARM) down the line by making rent increase assumptions - but if my mortgage adjusts in, say, 5 years, how do I pro forma my COC return? Do you simply assume worst case scenario (i.e. if rate adjustment cannon exceed more than 1% per annum, do you simply assume a 1% rate hike each year from year 6 onward)?

I am currently a commercial banker and vice president of one of the largest publicly traded financial institutions in the world. My passion for real estate began in 2005, when I co-founded a correspondent mortgage bank. I quickly realized that, if played correctly, the real estate platform could provide a solid foundation of wealth for many generations to come, while simultaneously producing cash flow today and allowing me to retire early. My primary focus today is to acquire residential real estate that generates cash flow in regions that are likely to substantially appreciate in value.

I currently have 2 SFR rentals in Southern California and 1 SFR primary in Southern California and my primary focus as of now is to acquire multi-family residential real estate that generates cash flow in regions that are likely to substantially appreciate in value.

Happy to be a prt of this forum!