All Forum Posts by: Brad Simmons

Welcome @Alex Peransi. I'm new to BP and REI, but not to Wichita. Looks like we have enough locals to have a meetup sometime.

Thanks @Brian Adams. I spent much of the morning reading the long thread you started about your success in this space.

I also noticed there's nothing reported on line 8 or 13 . Is that where management fees would typically be reported? Whether there or somewhere else, it doesn't seem to be accounted for anywhere, so that would effect NOI substantially.

Thanks @Account Closed. I think I understand the distinction you are making. To be clear, the seller didn't have an "asking" cap rate. They have an "asking" price, and I used the NOI as revealed in the tax returns to determine what the cap rate is (as the seller sees it at least). I'm not suggesting they did that math... who knows?

I understand that I would need to seek information from some other local brokers to determine what the actual market cap rate is, and make an offer based on that and other variables like @Jeff Copeland mentioned.

@Jeff Copeland Thanks for the explanation. That is very helpful.

The property in question is priced as a 6 CAP based on the numbers provided by the seller. So... for me, and for the location and class of property, it's not a great investment.

I'm reviewing the tax returns of the seller of a 32 unit C class property. Below are screenshots of the returns.

So to get NOI from this information, I should subtract Depreciation and Interest to get the actual expenses, correct?

Where do I find CAPEX on the tax returns? That should be added back in to determine NOI as well, correct?

Lindahl says Cap rate on a Class C property should be 10-11, so buying it at a lower Cap Rate is good, right?

I realize these aren't all the questions I need to know the answers to, but these are my first ones.

Good point @Account Closed. I've pretty much decided to go the MFH route.

That's true @Aaron Pinto. Thanks.

@Crystal Salton ...Southeast Wichita. It was on MLS. I don't know why they're selling. I haven't talked to the seller.

Multifamily converted house with a small 1 bed/bath house in back yard. Small house is 1 bed/bath and needs about $5000 (according to seller, so $7500) to get up and running. Rented previously for $375. Other two units currently rented for $450 and $375.

Price: 59,900

Monthly Income: $1250 (according to seller) I think it's more likely $1325

Monthly Expenses: $50 - Insurance, $75 - Taxes, $20 - Trash, $504 Variable (maintenance, vacancy, water, capex, management) - $649 Total

Monthly NOI: $551

Financing: 30 year fixed @ 4.375 and 25% down - $239

Monthly Cashflow: $312

Those numbers assume the sellers numbers are correct for rent. Obviously it gets a little better if I am right. Also, I'll have the cost of rehabbing the 1 bed/bath house as well as well as lost income while it's being fixed up. I would probably get a HELOC to cover those costs.

Feedback please.