All Forum Posts by: Rikard Lorén

Yeah, u R right, I haven't done any investing and is new 2 the game, atm I'm just researshing for info and trying to learn.

So your telling me that a 25/30 year amortization loan is standard for multifamily ?
And in it's standard to being setup:ed as: I will get a loan for 25/30 years ( it's written for that in the documents ) but the bank wants me to payback in 5-10 years ? or do u mean that the intrest is for 5-10 years and then it could be higher for the upcoming years, therefore it's set to 25/30 years so I/the bank got a little playroom ? I'm on the same page as u or I don't get it ?

Well, I don't really know if investments is better outside my country but I belive that I will invest in sweden becouse I want to be where my investments are and have controll over them.


and this part:

"but usually it's not fully amortizing; typically it's anywhere from 5-10 year term, depending, and the longer of that, being aggressive."

Could u explain it a bit more ( having a hard time to get what u mean, IF it's not what I wrote above )

*I have a little problems with the translate with some words, sry for that*

//Rikard

*One more*

Is there any "generall" payback time on decided amouts ? like: 100.000 dollars shoulden't take more than a maximum of 25 years to payback.

And 1.000.000 dollars shoulden't take more than a maximum of 40 years to payback ? ( according to the bank/bankman )

one more question came up:

I live in sweden so I don't know how it is here but where u are ( U.S ? ), is it easier to get a longer loan ? I mean, if ur deal with the bank works and both parts are happy, could you aswell say "hmm.I changed my mind, instead of 30 year, I wanna go for 50 year payback" and the bank man gladly says: Ofc, said and done, no problem at all" Or is it any stuff u have to calculate on ? I mean, it's better for you and the bank get more money, so why not ? Thanks!

So as long as I can invest the difference after tax at a higher yield than I pay, I'm all good ? ( short said )

Hello !

So i'm just playing with the though:

If I'm going to focus on multifamily-apartments, MANY, so i will not just buy one, I want to maximum the cashflow and buy more properties so I get more money, so for example, If I COULD get a 50 or 60 year loan instead of 15/30, would it be better with the 60 year loan ? we all know that the total I will pay in intrests will increase but so will the total income I get from cashflow, right ? So for this tactic: Buy and hold ( not selling anyone ) gonna buy 100+ properties, would the longer loan help me or is there a "breaking point" where u stop earning money and instead loose money ? I woulden't say so becouse, the less I pay, the more money I can save and invest, Right ?

Would be gr8 if someone could tell me their though about it all, thank you very much!

Okey William, thanks for clearing the stuff out, So the cap rate is personally and not set by the market ?

1 more edit: This whole thread is focused on how to calculate a price for a wholesale ( buying a property for a price, calculated with the active rental income? )

*Edit*

Assessed value: 1,813,000, of which SEK 207 000 kr land
Value year: 1992
Tax Rate: 35.5
****

Joel: well, that's what the seller says at least, but atm I'm just looking through the theory to get a better insight in how the numbers works and what u should think about. So you say/mean that u will evaluate a property by the tenants living in it and the property itself ?

Here's some info translated in poor english:

*******************************************************************************
Rental property with four residential buildings and a row of garages.Located near the lake and has partial sea views from the area.Very popular accommodation!

Type: Residential
Local, area: Bengtsfors Norebyn
Price: 4 300 000 SEK.
Area: 664 m²

Layout: Rental Property with four residential buildings and a row of garages.Located near the lake and has partial sea views from the area. Very popular accommodation, Total 9st apartments, relatively newly built (1992). Cold Rents,( they pay for the electricy, water, heating and so on ) good economy and low risk of the owner.Owned today by the company and can be sold as a company or through normal real estate sale. 4 residential buildings with a total of 9 apartments, 5 apartments with 3-room and kitchen and 4 apartments with 2-room and kitchen. Garage long, carport for every apartment. Cold Rents gives good economy. Parking: Garage of length.

Building 1 ( I guess building 2,3,4 is the same and they were all built equal time )
Year built: 1992
Foundation: Crawlspace
Frame: Wood
Floors: Wood
Exterior: Wood
Roofing: Concrete tiles
Window type: 3-glass
Ventilation: Mechanical supply and extract with heat recovery
Water / Waste: Private water, deep drilled well., Onsite wastewater treatment, 3-chamber
Heating: Exhaust air heat pump and fireplace in each apartment

Communications: Good bus connections.
Environment / Nature: Lakeside!.

Size
Total: 664 m²
Housing: 9
Living area: 664 m²
Site area: 10,972 m²

Economy
Price: 4 300 000 SEK.
Rental income: 434 000 SEK / year
Assessed value: 1,813,000 SEK
Operating cost: 75 000 / y

This is everything that is posted, I guess u ahve 2 contact them for more info.


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Dan: Yes, I get what u mean to 100% but according to Ken, to get the value of a property, u take the NOI divided by the cap rate ( he describes the cap rate as: "If you have a property with an anual 100.000 NOI, in a market where the capitalization rate is 6%, then the value of that property would be 1.66 million dollars, that is: NOI ( 100.000 dollars ) divided by the cap rate ( 6 % ) = asset value ( 1.66 million dollars )" and taht is what he would pay for the property, yes ?

so I mean, this "cap rate" he's talking about, could not be his "personally though", I mean, he also says that u can check the cap rate in that market area from a local banker, and ur not asking him/her for him/hers PERSONALLY cap rate, becouse the banker gonna give u the MARKETS cap rate, so is it the same thing we are talking about or is it 2 different things ?

I'm from sweden and can read/write to 90% english, but sometimes I have a hard time understanding the words translated to swedish when they got many/more comparements ( means more than one thing translated ).

1,a: hm, well then I guess I have to researsh a little about the rule, so u mean that I should save 50% of the income 2 pay the expenses and repair and so ? Iand then I would "lay on the safe side" becouse I got some buffert for that costs?

1,b: but is it really fair to tell the seller, "hey! I predict that ur property is worth ****** becouse I need 50% of the income for repairs and expenses" I mean, to me, it sound more fair to come up with a price that is calculated right now, not with a 50% marginal, I don't see how I can get a true price on the building that way... u get what I mean ?

2. cap rate = the value that the building increases with each year, right ? Or I'm totally lost here ?

3.I don't really know, I have 2 research some more I guess, thx so much for the answers Jeffrey!