I'm looking to make my first deal in Rochester NY I need advice
Hi, I'm brand new to BP but I've already logged several hours reading through threads and getting some education.
I'm from Los Angeles and have always wanted to get started in REI. I recently bought my second home (still in escrow) and am in the process of fixing up my existing house to rent. And then something unexpected happened... I was offerred a ridicuous sum of money for a building I own for my business. I couldn't refuse that deal and now I'm in escrow to sell that building.
I'm looking to do a 1031 exchange and I'm going to profit $215,000 from the sale of the building. Talking to my attorney it, sounds like I need to purchase $550,000 to do a 1031 exchange (the building sold for $1.1 million but I own it 50% with my brother).
My goal is to purchase a property or properties to return $80,000 NOI from the purchase of $550,000 in investment properties. In Los Angeles that is a bad joke, but it seems like this may be possible in Rochester.
Rochester has always been on my radar. I've been there once, to Pittsford and it looks like a nice town. But I've since learned Pittsford is a nice town and that isn't where I will likely be investing to get the kind of income I want. Plus I'm in the printing business and I've paid out over $2 million to Xerox in the last decde. As a result I hate Xerox and it would make the universe cosmically in balance if I get income back from the Rochester area.
Seriously though, I need some help here. For instance, I've talked to one guy in particular from loopnet who advertises 25% cap rate and then on the phone he's sort of like "well.. you know... it's more like 18%" Don't get me wrong, 18% cap rate is amazing, but why lie about something so fundamental on loopnet then tell me something else on the phone? What else is not accurate?
So to lay it out. What I want is to buy and hold and I want to spend a minimum of $550,000 and I want a NOI of $80,000 a year. I don't care if a property I buy for $30,000 today is worth $30,000 ten years from now. It doesn't matter to me. I'm not looking for equity appreciation, I want income.
So for instance here are a couple of deals I've seen which is a portfolio of several properties and supposedly turn-key.
http://www.loopnet.com/lid/19248464
Or here is another example of a deal, and I would build up my own bundle of properties to spend at least $550,000
http://www.loopnet.com/lid/18485055
So here's where I need help. Is this real? Are people really selling properties that are returning ridiculous amounts of money? Why would anyone want to sell a property that is NOI 20%+ a year? It seems stupid to ever sell this. If this exists, why do I have a chance to buy it? Why wouldn't all these properties already be bought and I have a bidding war with the next idiot for a chance at one? Instead, if you look at realtor.com for example I've created a spreadsheet of over 20+ properties that I could buy to total $550,000 so I could buy a whole city block for $550,000. These aren't even moving, there are constant price reductions. They all have "tenants in place" and "management in place". What's the story?
So from browsing here the last couple of days, I get that the story is "war zone". These are high crime neighborhoods where someone will rip out $15,000 in damages just to steal $100 worth of copper pipe. What are real experiences in these neighborhoods?
Can I really buy a portfolio of 15-20 houses in a war zone and collect my goal of $80,000 a year remotely? It sounds like some people have said "I wouldn't go there" or "yes but you need a good property management company". Is the "War zone" my only option to get the kind of income I want?
I need advice, and I need referrals for a good area realtor and a good property management service. I also need to know is it possible to make a deal to fund multiple properties where I put in $200,000 to finance $550,000 . Going into escrow on one property is a lot of work. Who would finance 20 properties? What a headache. Are there 20 home inspections involved, 20 apraisals, 20 reams of escrow papers? I only have $200,000 cash but I have to spend $550,00 or I get hit with a big tax bill. How do I do this?
Thanks and congratulations on this really awesome website. I feel fortunate to be here.
-Andre