All Forum Posts by: TJ Woolum

Wanted to circle back on this. I just completed my 1031 exchange. I sold one property and bought two in exchange. I used @Dave Foster and had the best experience with his team. They made it all easy!

1 Vote

Quote from @Amit Chadha:

Quote from @NA Eid:

tj woolum

are you still liking the course? Im thinking of signing

@TJ Woolum I have the same question, are you still liking the training? Thanks

Yes I am. So far I really enjoy it.

1 Vote

Quote from @NA Eid:

tj woolum

are you still liking the course? Im thinking of signing up. Thanks!

Yes I am. So far it has been great.

0 Votes

Update... I pulled the trigger and joined Nate Barger's BRRRR Invest Academy. One week in and it is already leaps and bounds better than what I experienced in Tom Cruz's Section 8 Secrets. The support, training, and organization of this group is (so far) exactly what I have been looking for!

5 Votes

Quote from @Jay Hinrichs:

Quote from @TJ Woolum:

I am very interested in joining a mastermind or online group that can help spur creativity, learning, and motivation to go all in and scale up. I'm embarrassed to say I paid $5k to join Tom Cruz's Section 8 Secrets group a year or so ago. I unfortunately didn't find any value in the program. The online course was simply Tom reading through a PowerPoint he made. You also gain access to his Discord group which, to me, is a huge message board that is difficult to keep up with, follow specific conversation, etc... So unfortunately I feel like I completely wasted $5k as the whole thing was very impersonal and I didn't learn anything he doesn't already discuss in his TikTok's.

Now I am thinking about joining Nate Barger's BRRRR Invest Academy. I belong to the Facebook group and have found the community to be pretty valuable. I've searched the Bigger Pockets forums and it seems many people speak highly of the academy and say it is worth every penny. I'm just afraid I am making another mistake and will waste another $5k.

Ultimately I'm looking for a cohort of people with a wide range of experience in real estate. Some who are on my level (~10 units) and some who have done much more. People who can share their experiences in different markets or with different investment strategies. And at the end of the day, a cohort of people who will motivate one another and hold each other accountable to their goals on a weekly or monthly basis.

What has been your experience? Has anyone wasted money on some of these programs like I did? What programs or masterminds have you found to have the biggest impact on your real estate career? How did you find them?

if you already have 10 units what is it specifically that you think your missing out on. your far far ahead of 90% of all investors. keep your money and keep doing wh

I've accumulated my properties one by one and with little upside other than cashflow. I want to learn to scale at a much faster pace, take advantage of appreciating markets, etc... I'm happy with what I have accomplished so far but not content or satisfied. That's why I want to join a group. To learn from those ahead of me, find new ways to scale, and take my real estate game to the next level.

1 Vote

4 Votes

Can anyone help me with a 1031 exchange in Illinois? This will be my first go at it. What fees should I expect? What lessons have you learned that I should be aware of?

>Closing Date On Sale: 10/27/2023

> Sale Price: $123,900

> Equity (Before Closing Costs and Property Taxes): $59k

> Estimated Equity (After Closing Costs and Property Taxes): $46k

0 Votes

Quote from @Kyle Dwyer:

Hi Chris,

You're on the right track! When using a cap rate to derive a value for a property based on its net operating income (NOI), the cap rate you use will depend on the market and the specific property. Cap rates can vary across different areas and property types based on investor expectations, risk perceptions, and market conditions.

To determine what cap rate to use, you can consider the following approaches:

1. Market research: Look at recent sales and transactions of similar properties in the area. Analyze the cap rates at which those properties were bought and sold to get an idea of the prevailing rates in the market. This can help you gauge investor expectations and market trends.

2. Comparable property analysis: Identify properties similar to the one you're underwriting and analyze their cap rates. Look for properties with similar characteristics such as location, size, condition, and income potential. This can give you a benchmark for the cap rate you might expect for your property.

3. Investor preferences and risk assessment: Consider the risk appetite of investors in the area and the prevailing economic conditions. Factors such as local market stability, growth potential, demand for real estate, and interest rates can influence investor expectations and risk perceptions. This, in turn, can impact the cap rate investors are willing to accept.

4. Consultation with local experts: Seek advice from local real estate professionals, brokers, appraisers, or investors who are familiar with the market. They can provide insights into the cap rates commonly used in the area and help you understand the specific factors driving those rates.

Remember, cap rates are just one piece of the puzzle in valuing a property. They provide a snapshot of the property's income relative to its value but should be used in conjunction with other valuation methods and considerations.

Ultimately, conducting thorough market research and consulting with local experts will give you a better understanding of the appropriate cap rate to use when deriving a value for your property.

Best of luck with your property analysis and attracting investors!

This is a great explanation. Thank you!

0 Votes

Los Angeles County, California

Quote from @Dylan Speer:

The cap rate is a measure of the return on investment (ROI) of a real estate property.. A lower cap rate indicates a higher property value relative to the income it generates, while a higher cap rate suggests a lower property value relative to the income.

If you purchase a property using all cash, the cap rate directly represents the return on your investment. For example, if you acquire a property with a 5% cap rate, it means you can expect a 5% return on your investment based on the property's net operating income.

If you finance the property with a loan, the relationship between the cap rate and the interest rate becomes crucial. The cap rate does not directly consider the financing costs, so the impact of leverage needs to be evaluated separately.

a) Higher Cap Rate than Interest Rate: If the cap rate is higher than the interest rate, the property's income is expected to provide a higher return than the cost of borrowing. This scenario is often considered favorable for investors, as they can earn a positive spread between the property's return and the financing cost, potentially enhancing their overall return on investment.

b) Lower Cap Rate than Interest Rate: If the cap rate is lower than the interest rate, the property's income may not be sufficient to cover the borrowing costs. In this situation, investors may experience a negative spread, which means the income generated by the property is not enough to offset the financing expenses. This scenario could potentially reduce the overall return on investment or result in a loss.

I needed help understanding cap rates too. Thanks for this explanation.

0 Votes

Los Angeles County, California

Can someone please help me understand cap rates? For some reason I can't wrap my head around it. I understand the mathematical equation... that's easy enough. Cap = NOI / Property Value. NOI is pretty straight forward. But how do you determine the property value? Well, one way is to do the math and say Property Value = NOI/CAP. But now I'm left in the same position as before... how do you determine the cap? Around and around we go.

Let me give you an example of what I'm struggling with. I am currently in the process of closing on a small multi-family. The NOI is $33,508. After some negotiating, we settled on a purchase price of $422,500. Higher than I wanted to pay but there is upside with renovating one of the units and drastically increasing the rent. Plus the area is nice and continues to appreciate. Anyway, assuming the property value is $422,500, cap rate would be 7.93%. Great. What does that tell me? I don't know. But... a recent appraisal came back WAY below at $180k. Everyone agrees this valuation is nowhere near reality but my lender won't lend now and I am fine walking away. My realtor asked the selling realtor what comps she used to determine the list price. She gave some examples but then said "The price also reflects the cap rate of the property." Well wait a minute... how can she determine the cap rate of the property if we're debating the property value? Cap rate at $422,500 is 7.93%. Cap rate at $180k is 18.6%. Clearly the $180k doesn't make sense but either does her argument that the list price was set to reflect the cap rate of the building. At least it doesn't really make sense to me.

Any help here would be greatly appreciated.

1 Vote

All Forum Posts by: TJ Woolum

TJ Woolum has started 10 posts and replied 28 times.

Post: 1031 Exchange in Illinois

Post: Online Gurus - Tom Cruz (Section 8) and Nate Barger (BRRRR Invest)

Post: Online Gurus - Tom Cruz (Section 8) and Nate Barger (BRRRR Invest)

Post: Online Gurus - Tom Cruz (Section 8) and Nate Barger (BRRRR Invest)

Post: Online Gurus - Tom Cruz (Section 8) and Nate Barger (BRRRR Invest)

Post: Online Gurus - Tom Cruz (Section 8) and Nate Barger (BRRRR Invest)

Post: 1031 Exchange in Illinois

Post: How to use Cap Rates to underwrite Deals?

Post: How to use Cap Rates to underwrite Deals?

Post: Cap Rate Confusion