All Forum Posts by: John K.

Hi,

I am trying to make a "benchmark" of various states and metro areas with the Price - to - Rent Ratio.

It is quite easy to find median or average house prices for each state or even metro (for example using in trulia), but I am having hard times to find such statistics about median or average rents.

Has anybody done similar research? Are there some good websites with rental statistics? Or do I have to wait for the results of the 2010 Census. :D

I have almost filled the 20GB storage already. ;o) The good think is that there is even more gmail can provide:
https://www.google.com/accounts/PurchaseStorage
80GB for $20 etc..

The good thing about having all the emails outside of the computer (unlike outlook) is also that it is protected in case of a hard drive failure.

Well, I know that I can't expect that everything will be going as I have estimated it in an analysis for the next 20 years, on the other hand, there are situations when you can be just guessing without a good real estate analysis.

For example - when I was searching an investment property, I had a few properties in pretty much same area, of a similar type and age. In that case, I will use the analysis (and I mean IRR or NPV) for comparing these properties - to choose the one which will be more profitable for me.

Another good example - I was just negotiating seller's financing for a while, and without the knowledge of NPV and IRR, I simply wouldn't know what to fight for in the negotiations. I was able to present a few different options, which has the same financial profit for me and when the seller wanted extra 1% on interest, I have seen what it will change, and how I should counter to keep the same NPV (IRR) - such as making the amortization longer, etc. Being able to calculate everything and compare (even it's partially estimation) I had a big advantage against the seller who was just guessing.

Hi,

I am finally finishing the seller's financing contract (I am the buyer) and I have a question about pro-rated rents. The house is currently occupied, and I have read in a few books, that when you actually close in the beginning of the month, you should get the rents for the most of the month (the rest of the month rent pro rated).

Is this automatic thing, or do I have to write it in the contract?
If I will write it in the contract, I can see that it will scare of the seller a bit (since he might not be realizing it now). He might not want to do that.
The first payment to him from me will go on the 1st of January, so I would have almost full month rent extra, before starting paying him the mortgage payments.

One more thing, what about the utility bills - they are also prorated, so I will have to take care of them since the closing date? Or is he still responsible for the rest of the month.

Thanks in advance for answers!

Hi,

I would disagree with Financexaminer - hope he doesn't mind. ;o)

In any calculations of investment returns (even the ones like cash on cash or ROI), you will be inaccurate, when something unexpected happens (like the tornado in your example). It doesn't matter if you are calculating IRR, NPV or Cash-on-cash. It will always skew any type of analysis.

When you would want to be really accurate, you could find out some statistics about the natural disasters in the area and include the risk and probability of that in the calculations.

Anyway, I really think that it is very advisable to calculate the methods which take in count the time value of money. You can make decisions, which might not be financially the best, when you use only the simple calculations.

I agree that for most of the people and smaller investors, it can be hard to figure out the discount rate for calculating NPV, and so after discussing it here - I will be using IRR much more in the next version of my real estate investment software.

Hi everybody,

I have researched the forum and also the local groups, but haven't found anybody from the Topeka area in Kansas.
I am purchasing here a multifiamily investment property, and I will be looking for a property manager, handyman, etc.

So it would be great if there are any investors from this area, to share maybe some experience and contacts with me.

For the property manager, I have heard a lot about Travis from RMS, but it would be interesting to hear some investors experience with him. Or do you use some other property management company in Topeka?

Thanks!

Thanks everybody again! I already send in my offer last week and in the end I didn't propose my terms - instead I am waiting for the seller to come up with the terms.
The terms I was counting with were pretty generous and so it is possible that the seller will come up with actually lower expectations. I will see and I will let you know guys - hopefully this week! :D

These are things, which are important in my experience:
- ask for references (3 tenants, 3 owners - call 2 of each and ask them about the property manager, not just if he is good, but more if he always get repairs done fast and well, if he is doing repairs too often and if they cost too much, how long it took for renting the place out etc.)
- ask for minimum trip charges (in one company I found out that there is minimum $70 trip charge - so even if they spent 10 minutes in the property, I will pay at least $80)
- ask if the fees are paid also when the property isn't rented (that's not very good)
- ask about their advertising techniques (sometimes it's overpaid for what you get, and better you can advertise by yourself on craigslist or something)
- ask if they handle eviction for you and how much they charge

That's all I can think of now. I wrote once article on my blog about it, I can send you the link.

Hi,

I am using Foxit PDF for editing the pdf version of contracts. You can simply insert text there (like for initials, or names etc.) and also there is a graphic object function, where you can then create your signature with a "pen tool".
For the signatures, I have created one in photoshop or MS paint and saved it. Now when I need to add signatures in the offers, I always just insert that image through foxit pdf and resize it to fit in the space.
This works for me and is pretty fast and easy to use.
Foxit PDF has a trial version and otherwise is for $20 or $30, but you might be able to find some older version for free on the internet possibly.

Thanks guys for the helpful advices!

I think my Real Estate agent is really doing things in my favor - she by the way found this property on MLS (she was calling for me to many listing agents and came out with 5 opportunities with sellers financing!).

Her reasoning was also, that if the seller will come up with the terms, he might not even ask for the 30% down. I based my real estate analysis on the 70% LTV 30y-fixed @ 6% with balloon at 5th year, but if the down payment would be lower, my returns would go up!

I am also offering less than the listed price (about 20%), so don't worry that I would be over paying just because of the financing.

I will definitely add this in the contract. In one book, I also found an advice to add this in the seller's financing offer:
After the five-year period, if the economy is not desirable or advantageous for refinancing to pay off the trust deed, Buyer may have the privilege to extend the note for another year with a 1% increase in interest rate.

... did you guys ever used a clause like this in the offer?

I am not sure about this. I will have to check with my realtor.