All Forum Posts by: Stephen M.

bump.  Anyone have any experience with him?

Thanks, so helpful!

Hi,

This may be a dumb question but I haven't really seen it commented on: are the list price on turnkey properties negotiable when making a offer?  Are there offer/counter offers like in usual home buying? Thanks 

Thanks for the insight!

Hi,

Anyone know anything about the accredited residential manager certification from the institute of real estate management or the various certifications from the national association of residential property managers?  Does it carry much weight?  Thanks

I appreciate all the input.  Admittedly i am new to this and am trying to learn as much as I can.  BP has been great for this!

I know cash flow isn't profit but I didn't expect it to be negative either, especially with a sizable down payment of 20-25%.  This may very well be the newbie in me but it would be a tough sell to willingly get involved with a property that has negative cash flow for an unknown period of time and wait till the sell to regain/ make your profit. 

In a kind of separate note, From what I've read, the ability to do forced appreciation and to increase rent and thus sell price is a big means to generate ROI, and thus profit. However it seems a lot of properties have already done these "easy" fixes and deprives an investor of taking advantage of forced appreciation and thus a big engine for ROI.

Any thoughts?

Hi BP community,

 I'm a new potential real estate investor in the Seattle area.  I happened upon the BiggerPockets podcast and found it to be very informative and am since hooked.  The discussion is fantastic and very engaging.  

I've since read a couple of books from the BP recommended list and have done some analyses of multifamily housing in my general area, including some analyses of recently sold properties. I am considering investing for cash flow primarily, and building equity secondarily. From my readings and discussion with a realtor, the cap rate in my area is in the 4-6% range. In my calculations I used the 50% expense rule and assumed the information on the MLS and various realty websites are pro forma, rosy, and best case scenarios. With this said, all that I have seen and calculated result in negative cash flow.

The example is below from a recently sold property, with financials from the realtor website, and my calculations:

Duplex

Sold price: $385K

With 20% down payment: $77K

Loan amount: $308K

With conventional 30 year 4% fixed loan, yields a monthly mortgage payment of $1470/month

Combined monthly rent (from website): $2350/month; $28,200/annual

50% expense rule : $14,100/annual

Thus, net operating income (NOI) $14,100/annualized; monthly is $1175

capitalization rate : NOI/purchase price : 14,100/385,000=3.7%

cashflow: monthly NOI $1175- monthly mortgage payment (1470) =-$295

I understand you can look at comparative rents in the area to see if the rent is below market value and do some forced appreciation.  However, for a new investor and landlord, it would seem a leap for me to think I can do better, or at least risk a negative cash flow monthly for this gamble.  

Are buyers hoping for appreciation to bail them out? Am I wrong in my calculations?

Thanks,

Steve