All Forum Posts by: David Wallace

@Ashley Gish

Reading through these comments it seems like an important point is being missed.

The amount of debt you have is meaningless without knowing about other things like income and assets. You could have 200k in debt and still be in a healthy financial position depending on your income. Don't worry about the comments from people who automatically assume 200k in debt is bad.

In terms of your decision to pay debt or buy property. The best choice depends on the returns you will get. By paying down the loan you're putting those dollars to work at 6.8 to 7.2%. Not a bad return actually. But if you can put those dollars into a property that returns a higher rate over the same time period (including capital expenditures over the years), then the rental is a better financial decisions. The challenge is finding a property that will offer the return you need.

Also, some people have mentioned refinancing your debt. That's a good idea. You can probably get a much better rate.

@Bruce Runn

Thanks for your response. It's helpful to hear about your experience regarding rent/expense growth.

Maybe I'm misunderstanding. $7200 increase in rents per year per building? I don't know what that is in percentages, but it seems like a very high rate of growth (for 2-4 unit buildingsin Minneapolis)

This is the source of my original question. With high growth rates, doesn't that push the value of properties up? Seems like these high rates of growth are priced in to property values. I'd like to understand what drives such rent growth.

Thanks again

@Tim Swierczek

Wise words! Thanks for the advice

@Lucas Duce

Thanks for your response!

That all makes sense as a general rule of thumb.

Do you ever look at market specific factors? ie, population growth, real estate development, job trends, etc.

My thought this. Based on the market i'm looking at (Minneapolis), it seems that higher growth may be priced into valuations. I'm wonder if other investors are seeing something happening in the market that would indicate higher expected growth in rents.

Thanks again,

Hi Friends,

When analyzing a deal that you intend to hold, how do you determine your growth assumptions?

For example, how would you go about projecting rent increases during your expected holding period? How do you project any increases in operating expenses?

It seems like these assumptions would have a big impact on your expected cash flows, and therefore, the value of the property.

Any advice for modeling assumptions would be helpful.

Thanks,

Thanks Jordan! I'll message you

Thank you Michael!

Hello,

I am excited to get started in real estate investing. I’ve spent quite some time reading real estate books and listening to the BP podcast. Now I want to transition into learning by doing!

I live in the Minneapolis/St. Paul area and want to purchase a duplex this summer to house hack. Currently looking to connect with agents, lenders, property managers, and other investors in the Twin Cities area.

Background:

I am pursuing my MBA at the University of St. Thomas and will graduate later this year. I also have held my Realtor license in Minnesota since September 2018.

Thanks,

David