All Forum Posts by: Trent Stone

The numbers look decent to me. I think the cashflow per door is a little low for that area. Also, make sure that you get actual data from brokers and PMs, don't ever trust the seller proforma. Also, look at the P&L from the last 12-24 months from the seller, compare bank records, rent rolls and receipts, etc. and see in in the worst month it was still a good investment. Be mindful of deferred maintenance or any other big ticket items that may be coming due that might not have shown on the seller's P&L. Also, be aware of the cap rate for that asset class in that type of neighborhood. If this property is in a D class hood, then you should run, if it's an A class, then you might be alright....Just make sure you do your due diligence and VERIFY. The seller will have to provide all records during the seller's disclosure period, you might as well ask for them now before you waste each other's time.

Awesome....Practicing is GREAT. I would make sure you include property management and maybe increase your capex and repairs a bit. A good rule of thumb is 30% between vacancy, repairs, and capex. If you are in a D class neighborhood you will cap rates at least 10+. I promise anything below a 10cap won't be worth the headache.

I LOVE real estate and investing. Just growing my network and meeting new people, don't hesitate to reach out!

What do you want to know about this deal? Doesn't look great on the surface.

You bet. What she needs to do is find an IRA custodian, aka, a Third-Party administrator (TPA). She cannot invest the IRA herself or invest with anyone in the direct line of her family tree, ie you, or your siblings, etc. The government has some other regulations so make sure she is doing everything through her IRA custodian. If she is going to do a 1031 make sure she has a 1031 coordinator BEFORE she starts to make any moves or she will get bit for sure. After the money is with the TPA she can invest in basically whatever she wants. If she is looking to be a lender keep me posted, we are ALWAYS looking for new money partners. Hope that helps!!

@Jacob Sampson is spot on about the number assumptions. But also remember the 1% rule is more applicable on the east coast than in the midwest, your cashflow numbers are not likely going to look near as good as Kansas or other markets such as Birmingham lol. So your criteria will likely be different than his, do what makes sense for you.

You'll want to make sure the deal will work and look good as is. Don't buy a mediocre deal and hope to make it good. Buy a good deal and make it great. Talk to several local PM's in the area and get there input about what is realistic. So run your first report with ACTUAL data(not just what the seller tells you), and then run another report AFTER you get all the data from your PM's.

I would fix your loan interest rate. For investment properties your loan will generally be a point higher than current traditional mortgage rates. Get an actual quote from a loan broker. Also, unless this property was JUST rehabbed, I would raise your capex and repair cost probably closer to 10% each. Be conservative with your numbers, if they turn out better then groovy. But you'd hate to see 2 years profit wiped out by a new roof or something. Your cap rate also depends on your neighborhood. If you can get this property to perform at a 6 cap and you are in a B-A hood, then probably good, if you are in a C-D, then I think you are asking for a lot more headache than it's worth. You are already a little short on the 1% rule, and once you tighten your numbers I don't think this is gonna be a great deal. I'm not saying don't go for it, but at first look, you will need to come down much more than $5,000. Be very realistic with your numbers and make a good argument to the seller about your offer. I would absolutely argue that with the uncertainty in the market right now that you need them to work with you. I think you'll be fine going forward, but use it as a bargaining chip right now.

Good Luck!!! 

It's simply one year, 12 months, divided by project time, then multiplied by your return for that project. ie. if your flip takes 4 months and you made a 10% return on your money, your annualized return would be 30%. 12/4 = 3, 3 x 10% = 30%.  

Hope that helped clear it up for you!!

Hey Ernesto! I don't currently have a team in DFW, but I do have family there who may be looking to invest soon so we might expand. Keep me posted on who you find and maybe we can work together in the future. Good luck!!

This is a point that Brandon Turner hammers constantly. There's always an excuse not to start, I think it's a perfect time to start. The fed lowered interest rates to 0%, they are getting ready to dump probably over a trillion dollars to stimulate the economy after this downturn. The sky is not not falling and the world is will continue turning. Our economy is going to rebound and our real estate market is going to continue to cycle. The RE market is due for a correction soon, it doesn't always follow the economy and there are always ways to make money in real estate.

Two quotes come to mind, Warren Buffett, "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." and “Never say you cannot afford something. That is a poor man's attitude. Ask how to afford it.” – Robert Kiyosaki.

So I would say, the world is fearful right now and ripe with opportunity, and, don't say you can't invest in real estate because (insert excuse), ask HOW can I invest in real estate right now. People are making good money in real estate right now and so can you. Best of luck to you, let me know if there is anyway I could be of service!!