All Forum Posts by: Tom Shepard

Thanks everyone-- we ended up not getting the property due to a higher offer coming in, but I appreciate the feedback.  We are working hard to find that next property and want to make sure it's right.  After reading all of your posts we had decided to disassemble it and move it to OUR house!  We had been wanting one anyway!

Thanks again!

The property we are working a deal on has a very nicely constructed fire pit in the back yard.  Its well away from the house and all other structures (fence, storage building, etc).  Any thoughts on keeping it or taking it out before we rent it?

@Jerry Hauck

Wayne Bice at Disvovery Home Report is also fantastic.

+1 (423) 322-2113

Welcome to BP @Ben McCall !

I'm not a wholesaler, but I am a buy and hold investor and live near Nashville.  Always looking to grab a lunch or cup of coffee with other investors to talk shop.  I want to keep my network as broad as possible!  Send me a PM and let's get together some time.  

HAPPY 30th @Brandon Turner!!!

Can't believe that mohawk was only 10 years ago!  2005?  Really...  LOL

Sorry we missed you in Chattanooga on your big US Tour!  Glad you made it safely!

I would ask them about the rent they get (total) monthly and then you can apply AT LEAST the 50% rule of thumb to ESTIMATE the NOI - Net Operating Income (This can be way off either way depending on condition of property and other factors). If you can find out the cap rate for the area (there is a podcast on #AskBP about that topic), and then apply it to your building you can at least have a starting point. Then you have to do the best you can to confirm the numbers both from the income and expense standpoint. The last mid-sized multi that I crunched the numbers on they were willing to share the rent roll and some of the expenses (you can get the taxes and some other numbers on your own).

You also need to know who pays the utilities, and what those run. Owner may pay water, sewer and trash, which adds up. You may also have some lights for common areas, water for maintenance, etc. These all have to be part of your expenses when figuring your NOI

One more thing (as if you needed more to think about) -- are there any other income streams? Is there a coin operated laundry? Vending?  

Here's how the calculations work:   

Income - Expenses = NOI (calculate it for the year)

NOI/cap rate = value

Cap rate could be viewed as return on invested capital, but that includes your down payment AND your loan, so it's not the same as cash on cash return.

So if your desired cap rate was 10% (again an ASK BP episode about this!)

And your rent roll showed $144,000 per year (I took $400/unit/mo x30 x12 mo)

Apply 50% rule of thumb to get $72,000 per year NOI (again this could be HIGH depending on expenses, who pays utilites, etc etc etc)

At a 10% cap rate:  $72,000/.10 = $720,000 value  IF rents are somewhat stable and expenses are exactly 50%.  Chances of that all happening are slim, but its at least a starting point!

Lots more questions than answers, but it sounds like its time to dig in and see what parts of the puzzle you can figure out, and try to estimate the missing pieces to come with your potential offer price.  

Great advice above from @Gilbert Dominguez and others about not letting your emotions get the best of you, its a business deal after all.  

There are tons of other threads on calculating value of a multi, and there are also some spreadsheets to look at on the FilePlace.  Also several great podcasts on the main BP Podcast about multi's.

Good luck!  And most of all -- Have Fun!

Are you looking for a lawyer or a CPA?  

Kraft CPA's is a great firm.  I have a friend there who does real estate CPA work.  PM me for details if you want.

Our family car is a 2007 Dodge Durango which we got new at 48% off the sticker price when it was still on the lot in October of 2008 and we had CASH (not many did back then!).

On beautiful cloudless days here in Tennessee my wife pulls out her 2009 Inifiniti G37S convertable, and I can be found in my other baby (2nd only to her), my 1965 Corvette convertable, which IS an investment in and of itself!

@Kelsey Damron

What you DO have on your side is youth, energy, and time!  I often wish I had started at your age instead of 47!  Stay on Bigger Pockets -- listen to ALL of the podcasts twice (that's like getting a college degree on its own!) and from there decide what niche of investing seems like it would be your passion.  Love people?  Maybe buy and hold landlording.  Able to swing a hammer and do some plumbing?  Maybe start flipping (and eventually work to have other people do that part!).  Love the art of the deal?  Maybe wholesaling is for you.

Figure out what you think you might like, then find some nearby people on BP that are doing or have done that, and offer to buy them a cup of coffee and ask them to tell their story, and maybe offer to help them in some small way on their next deal, anybody can sweep a floor and haul junk out to the dumpster!  Great way to get an education and who knows, you might just find a mentor or future partner!  Keep it fun!

Hi Michael and welcome to BP!

My wife and I are buy and hold investors in Middle Tennessee, we have one property in Chattanooga already and would consider more there if they were the right ones.  Would be happy to take a look at whatever you have.