All Forum Posts by: John K.

@Roy

Thanks so much for the reply. I see that there are quite a few extra options with the Canadian mortgage. In my property analysis tool, we don't really calculate with mortgage insurance and it's also quite impossible to somehow predict the variable interest rate for the future years.

I will concentrate mainly on the residential fixed rate mortgage. You mentioned that the applicant must qualify for mortgage with amortization of 25 years, but then he/she can choose the actual terms and shorter or longer amortization?

And you are saying that for commercial real estate mortgage, there would be monthly compounding, not the semi-annual?

RealEstateAnalaysisFREE.com actually became Zilculator.com ;o) It has the same basic functionality as before but more features were added. Plus the whole site is updated and works on mobile devices. 

Hi everyone,

we decided to add specific calculations for Canadian investors to our property analysis tool. Are there any investors here familiar with the Canadian market?

So far we are working on the Canadian mortgage calculation (see: http://www.amortization.com/faq.htm#2 ). Is there something else what investors from Canada calculate differently than we do here?

Thanks!

I was gathering the data for the chart last spring, but they are median house prices for the whole state and the section 8 rents for 2 bedroom units. I realize that they are not too accurate, and that these numbers will differ vastly area to area within each state - but I just thought it could be interesting for somebody - more just as a way to compare the states with each other.
After that research I started looking for investments in states I didn't consider attractive before. But again, there is plenty of things more to consider than just the price-to-rent ratio.

Just saw this thread in the Newsletter and thought I could actually have something to comment here, since I have done a research about this topic a year ago.

If you look for long term investments (buy and hold), as I do - you are trying to find markets with high Rental Yield or low Price-to-Rent ratio. Basically high rent and low price to buy.

I gathered some data (Fair Market Rents from HUD website and median rent from Trulia) and created a list of all the states. I am attaching it below:

Of course this is just statistics, and there are other things to consider and also there are many various areas of each state, but it can give you some overview at least. Hope it will be helpful to somebody.

I have created a Blog here and wrote about how I got the data and how I exactly calculated the Price to rent ratio and rental yields. If you would have ideas how to make the numbers more accurate, let me know and I can always recalculate it.

Here is the blog: http://www.biggerpockets.com/blogs/1585/

(I wasn't sure if "Article" or "Blog" is better, but it seemed that in the article I wouldn't be able to use pictures).

Thanks Michael! I am glad you liked the tool. I have developed it also with a help of a few investors here at Biggerpockets, but then I promised to Josh that I won't be starting new threads about it. I will be happy if you will use it and recommend to other investors. You can also send me suggestions or request new features.

Hi guys,

haven't been around for a while. However I decided to at least post an update to this thread, because I have finally put together the "benchmark" of all the US states with the price to rent ratio and the gross rental yield. I thought it might be interesting especially for the people who gave me the advices in this thread.

If there would be an interest, I can possibly write a blog post about how I did the calculations etc. Let me know.

Hi Cary!,

great to see another investor from Kansas coming here! I have just purchased last month 5-unit property in Topeka, KS, which is quite close. ;o)

I have been researching Kansas City as well, but it seemed that the return on investment was in general lower than in Topeka. The properties were more expensive and the rent weren't that much higher.
I got my property for $55,000, but it needs some work and the tenants are giving me quite hard time (or my property manager actually). The rents are over $2,000 though, so there is some potential.

It's just something you can check as well to compare - another close market area. Anyway, good luck!

Hi,

I would definitely say Fourplex over the Single family house, if you can afford it.
You will get much better return on the investment and also it's more secure in the terms of vacancies (usually you don't loose all the 4 tenants at the same time - and so you always have some income). Also multifamily properties are often sold with tenants in it. There is smaller competition of buyers for multifamily properties - because it's just a market for investors. You will definitely find out even more advantages.
If you would need to save money, and not pay the property manager - you could also think about living in one of the 4 units by yourself and managing the rest.

Hi Bryan,

so I have done 2 analysis reports:

#1 - using actual expenses I got from the previous owner and some estimates.
In this case the IRR seems to be: 35.45 %
Here is the report with the rest of the ratios and
details .

#2 - using the 50% rule for the expenses.
In this case the IRR was: 24.80 %
And here is the whole
report .

Just a few details - I have paid $12,000 down payment, but I am going to spend approx $10,000 in renovating 5th unit and for some other repairs. In the analysis, I had to put it in the "loan coast", because I don't have there "rehab costs" feature yet.
Also I have balloon in 4 year and the note is amortizing over 9 years (to reach the same height of the monthly payment as the seller pays). After that I was estimating to refinance @ 5% interest, 20 year amortization.
Again, this is something my analysis tool can't do yet - so I had to simulate this with 2 loans (one for 5 years and one for 25). I have to get again to programming, to add these features. ;o)

What do you think about the investment? I bet it's really small for you. But it seems to have good IRR (even when using property management).