All Forum Posts by: Zach Hitner

@Tom Shallcross thanks for responding and your take on my question. My wife and I don't use CAP for analyzing deals (we focus on CoC ROI and the 1-2% rule). We are still beginners with this and are open to new ways of analyzing deals but weren't sure if CAP was a valuable resource to use since it seems to be used so often by others in the market we are looking at getting into. I will definitely look into that podcast you mentioned! Thanks again!

Hello everyone,

I'm curious as to why it seems so many realtors/listings/landlords love to use CAP rates on single family properties when everything I learned and read say CAP rate is used a measure for multi unit properties? When analyzing properties, my wife and I use Cash on Cash ROI to try and determine the best deals. Is it smarter to use CAP? What function does CAP serve when it comes to analyzing deals at the single family level? We'd appreciate any clarity or advice when it comes to CAP and/or analyzing single family rentals! Thanks everyone!

@Lizzie Carver thanks for the advice! The more I hear, the less inclined we are to make a move on this listing : /

@Robert C. I appreciate the advice on commercial rentals. That’s another reason I’m hesitant with this property. The obvious goal is to create cashflow and the commercial not renting wouldn’t sink the ship, but the property would stagnate (the home should theoretically cover most of the expenses by itself). My wife and I are definitely geared more toward residential but this opportunity sparked my interest to say the least.

@Justin Brown what’s the date for this meet up and is there a cover?

@Syed H. Would love to talk. I’ll shoot you a PM.

@Shelby Ek no we have not. I haven’t even heard back from the seller. He seems motivated but apparently not that motivated. I asked for pictures of the interior in my initial inquiry. My wife and I are hesitant with the commercial aspect but the location and the structures that are already there are quite intriguing!

Well here goes my first post and also my first real inquiry with this amazing community.

My wife and I are looking to begin investing in buy and hold SFH or duplexes in Allentown, PA when I have taken notice to what could potentially be a real deal.

I have seen the property on the MLS before and passed it by because it is out of our budget (we have enough set aside to comfortably take on an $80-90k home or small multi with a bit left over for some cosmetic work and this listing is over $160k). However, the owner of the property I originally brushed off has posted the property to Craigslist and seems highly motivated to sell it. Here's a description of the property:

It is a three parcel listing with two structures on it: a 5/2 home and what used to be a doctor’s office so the property is mixed. It is zoned for MHD residential...I’m not sure how that impacts the properties in any way. The seller has stated that he is willing to both negotiate and finance, so he is extremely motivated to sell (which both excites me and makes me nervous). Looking at rent rates in the area, the 5/2 home could rent for $1300-1350/month and rented for $1250/month in the past (according to the seller while updates were being done to the home). The office should be rentable for $10/sq ft per year and is roughly 1000 sq ft.

The income potential is there for both properties. I have made an initial inquiry with the seller to begin the conversation and see if this is a good opportunity for my wife and I.

What I would love to have help with is determining the best course of action with this. I was thinking utilizing seller financing and also asking for a lower price and being able to put down 5% or so on the property so we have funds to do any repairs or updates the buildings may need. Typically all of those things don’t go hand in hand. My wife and I would like to stay away from hard money and asking family for additional funds since we will be leveraging money already on the property with the financing.

If anyone has advice or suggestions on how to approach this, my wife and I would greatly appreciate it! If you need any hard numbers, please feel free to ask and I will do the best I can to fill those in. Thanks ahead of time everyone!