All Forum Posts by: Trevor Richardson

Quote from @Jason Thompson:

@Trevor Richardson can you explain further what you mean by 'analysis' or 'reports' if you're meaning underwrite proformas yes I think many investors could use a service like that. Thanks for posting Trevor, have a  great week.

Like this.

https://drive.google.com/file/...

I’m curious how many new or experienced investors would be interested in multifamily property analysis reports.

You just provide the info on the property and the report is provided for you. This could be done for batches of properties. Like if you provided 10 properties on a spreadsheet you could get 10 reports back.

I’m trying to determine what would really help investors out there. 

Thanks,

Quote from @Katlynn Teague:

Quote from @Trevor Richardson:

Here is the difference. A good real estate agent will bring value to a property owner and get their property sold for the highest price.

A good wholesaler will get the lowest price and extract the most value away from the property owner for themselves and the investor.

If a property never hits the open market there is no way its true value will ever be determined. Wholesaling is like any other off market ploy like (Opendoor). 

It’s a free market so go for it but unless a property owner has to sell this very minute, wholesaling does not have the best interest of the owner in mind. 

Trevor, thank you for the feedback. 
However I disagree with your statement, "wholesaling does not have the best interest of the owner in mind". I am speaking for myself here, when working with a homeowner we are working hand and hand to make sure our offer is what is able to get them out of the situation that they are in. This goes for widows who just lost their husband, a house fire, a tree fell through the roof and other extreme situations. Wholesaling is what helps these people get out of these situations the fastest and saves them the hassle of having to find an agent, list on the market and pay commissions. A property does not have to hit the open market to have its value determined, thats what appraisals are for. You can also run a CMA on the property to determine value. A good wholesaler is not going to go after a retail property to contract and try to move to their investor, there is no profit margin in that. A good wholesaler is going to find a deal that needs obvious repairs and move it to an investor that is able to repair the property and is able to make a profit.

I could debate this for hours. I think there is a place for it, with desperate sellers and completely distressed properties.

I’ll just agree to disagree except for this point. Market value is not determined by appraisers. Appraisers are a risk backstop for the banking system. Value is always determined by the open market, what buyers are willing to pay. That’s the difference between on market and off market transactions. Good agents know how and where to list a property in that space to get the highest value. If that’s a pitch of wholesalers, you will drive owners right to agents.

Here is the difference. A good real estate agent will bring value to a property owner and get their property sold for the highest price.

A good wholesaler will get the lowest price and extract the most value away from the property owner for themselves and the investor.

If a property never hits the open market there is no way its true value will ever be determined. Wholesaling is like any other off market ploy like (Opendoor). 

It’s a free market so go for it but unless a property owner has to sell this very minute, wholesaling does not have the best interest of the owner in mind. 

Quote from @Jason Malabute:

Quote from @Trevor Richardson:

Listings/marketing material. We have had owners see our multifamily listings on the market, on LoopNet or MLS and liked our presentation and work so they contacted us.

Referrals. We try to have a connection with the larger brokerage community and encourage agents who don’t understand multifamily to refer to us. 

 when you get referral from an agent do you pay them?

Yes. I could write a book on the do’s and don’t of referrals. But typically 25% is the norm. 

Listings/marketing material. We have had owners see our multifamily listings on the market, on LoopNet or MLS and liked our presentation and work so they contacted us.

Referrals. We try to have a connection with the larger brokerage community and encourage agents who don’t understand multifamily to refer to us. 

The current average rental home in Reno and Sparks is $2,609/mo.

Address Income collects weekly single-family and multifamily rental rates to better analyze the Reno and N. Nevada market. Our team has put together this comprehensive graph showing home rental trends over the last 6 months for just Reno and Sparks.

I’m just glad someone separated multifamily from commercial. It’s a crime that they are clumped together in real estate. 

Quote from @Nick B.:

Brokers work for the sellers and have every incentive to inflate the price. Using forward NOI is one of their common tricks.

 As long as the proforma rental rates and expenses are realistic numbers, it's not a trick, it's just the market. A multifamily agent that doesn't run proforma for a seller client, is an agent that has no listings.  

Quote from @John McKee:

this property is fully occupied. 3 of the 18 units have been renovated. The remaining 15 units need to be renovated at 12,500 per unit or 187,500. The problem is the advertised NOI is based on the projected cash flow (increase in rents) I would get after I spent the $187,500 in improvements. In other words if I turned it around and sold it for a similar cap rate I would lose money.

On your exit you need to reduce your cap rate to whatever your market is at for stabilized inventory. So if you buy a 5% (actual cap) that’s marketed at a 7% (proforma cap) the listing is telling you if you renovate you can get it to a 7% cap.

For the exit you are not going to sell it at a 7% because the property has been renovated with new tenants. Stabilized it could be attractive to investors at a 5% cap exit. With your new cash flow that’s going to create a margin.

If it's $100,000 with an actual 5% cap at sale that could be a 7% cap. You have $5k NOI, after renovations you have $7k NOI. For the exit you would divide $7k NOI by that 5% cap and now you are at $140,000 for a sale value. You just made $40,000 in value from the new cash flow.