All Forum Posts by: Wyatt Franta

Brenda,

If you're looking in Vancouver, just DM a criteria and I'll let you know if anything matches.

Currently, the market is red hot and not a lot lasts longer than a week if priced right. Be prepared to move quick, regardless.

Good luck!

Hey Caleb,

 If I'm getting this right, the Buyer put out an offer that expires in X days, and your Seller wants more time to consider? You should hop on a call with the Buyer/Buyer's Broker and explain to them why they need more time.

In most markets today, Buyers have zero leverage and are at the mercy of Sellers. They likely won't want to lose the deal, so they will wait out the time requested. If you want to get technical with it, you can request the Buyers to present the same offer since it will have 'expired', or the Sellers can sign the original offer. 

I hope I didn't misinterpret the question, good luck!

Hi Nathan,

Back of the envelope numbers are looking doable on this, given the market, and if there isn't a debt service to be paid. OpEx is typically from 30-40% dependent upon the age of the property, but I'll use 30% here.

25% vacancy rate = 9 months of rent @ $4,000 = $36,000

$36,000 - 45% for Operating Expenses (30%) + Commissions & Management (15%) = $19,800

$19,800 / $350,000 = 5.66% CAP.

Just my 2c. Hope it works out!

Hi Rad,

The most painless method of finding a quality contractor is to connect with well-established brokers in the area. They've had the fortune and misfortune of dealing with the good and the bad, and they'll have a primary and secondary choice for you.

If you want to go down the solo route of finding a contractor, typically, Google reviews are a reliable resource. They crack down on any suspicious reviews and don't allow the business owner to delete bad reviews, as long as they are legitimate (most of the time, anyway). Yelp is known for deleting and purposefully trashing businesses that don't pay for their premium services, I would avoid anything on there.

Good luck! 

Hi Cathy, 

#1 - You'll want to have a more 'current' P&L ledger for this. What most investors look at is known as a "Trailing 12 Months" or T-12 for short. They want to see how the property has been performing for the past 365 days. That way, they know if they're investing in something that's pristine, had some improvements made recently to increase cash flow, or currently needs improvements.

#2 - You are correct; improvements made to the property are known as capital improvements. Investors may request to see receipts for any and all capital improvements for the previous 1, 3, 5, etc. years. This allows them to get an understanding of what deferred maintenance is lingering, or what they'll need to budget for in the future, given the age of materials.

#3 - You can call this deferred maintenance (work that needs to be done in order to bring the property up to market conditions). 

The example you provided wouldn't necessarily pass as deferred maintenance, however. Deferred maintenance has to do with existing structures/materials. Creative additions to a property to increase cash flow can be considered upside potential. It just needs to be legal & possible, of course.

Also, a buyer is demanding stuff from you in this incredibly one-sided seller's market? That's hilarious.  

Hey Patrick,

I love lawsuits like this because it becomes a game of "Who Has The Better Legal Team?". I skimmed through the lawsuit on my break looking for any keywords that could nail Cardone, but I don't see anything guaranteeing or promising the elusive 15% IRR mentioned in the class action. There were terms such as "expect", "you can achieve 15%", etc. and those are close, but can easily be danced around by a good defense.

However, I think his social media posts are extremely deceptive and could potentially lose him this case. He makes the claim that an investor's money is safe with Cardone Capital several times on his Instagram and that in no way can be guaranteed by a brokerage unless it's explicitly mentioned in the funding contract (don't know the exact term for it), stating something along the lines of "Investor's distributions upon exit will be at their initial contribution (plus inflation?) at minimum".

End of the day, it comes down to the contract Susman signed. I think Cardone will win or will be slapped with a small fine at worst.

@Oliver Leonetti

Hey Oliver,

You will never get a consensus on timing. We all have our own unique insights on the market from various sources, and our views are justifiably different from each other.

With that said, from my perspective, it's best to wait until after the election. A lot of market confidence rides on the outcome and it could very easily shake up real estate markets regardless of who wins.

Good luck!

@Jen Tabernacki

Basements are traditionally not considered additional square footage, unfortunately. The reason being, from my understanding when I learned this, is because most loan programs don't consider their square footage when appraising the value of a property.

@Jen Tabernacki

Hi Jen,

Your answer lays entirely in what's known as "Replacement Cost". In other words, can you build a brand new building that will yield you the same or better cash flow than an already existing property on the market?

This is normally calculated by the $/SF to build in your area. An experienced general contractor in your area should be able to give you some solid ballpark estimates on these numbers, so find one and give them a call.

Also keep in mind that new construction will cost much less to maintain than older buildings, so when projecting numbers you need to reflect this on your OpEx.

Good luck!

Hey Artem,

Property sale costs shouldn't be 10%. Usually, closing costs are brokerage fees + 2% MAX for escrow, title, other fees. I would change that to a max of 8%.

Your repair costs could potentially be reduced to a flat $100/mo depending upon the age of appliances, floors, etc. 

CapEx is low at 5%. Capital expenditures are your big-ticket items like new roofing, electrical, plumbing, etc. Typical percentages range from 7-10%. Older buildings command 10-12%.

10% Vacancy is higher than average. In typical markets, investors plan for one total month of vacancy for the year, or 7%.

Good luck!