Comments on: Income Real Estate Investors: Learn How to Analyze a Property before you Get Burned! http://www.biggerpockets.com/renewsblog/2007/07/27/income-real-estate-investors-learn-how-to-analyze-a-property-before-you-get-burned/ Learn, Network, Invest Sun, 12 Feb 2012 02:59:04 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Karen Richards Brokerhttp://www.biggerpockets.com/renewsblog/2007/07/27/income-real-estate-investors-learn-how-to-analyze-a-property-before-you-get-burned/#comment-85267 Karen Richards Broker Mon, 09 Aug 2010 22:01:17 +0000 http://www.biggerpockets.com/renewsblog/2007/07/27/income-real-estate-investors-learn-how-to-analyze-a-property-before-you-get-burned/#comment-85267 Most interesting post. As in every industry there are those who could be termed wannabe's as well as newbie's. This agent probably falls into one of those two, that being said grouping all real estate agents into one unscrupulous group is very unwise. This recent economic downturn has been great overall for the industry as it is weeding out the ones who should not be in the business to start with. yes this agent does work for the seller and it may be that this agent posted this questionable info at the sellers direction, we will probably never know. A very savey buyers agent would have seen through this right away. Most interesting post. As in every industry there are those who could be termed wannabe’s as well as newbie’s. This agent probably falls into one of those two, that being said grouping all real estate agents into one unscrupulous group is very unwise. This recent economic downturn has been great overall for the industry as it is weeding out the ones who should not be in the business to start with. yes this agent does work for the seller and it may be that this agent posted this questionable info at the sellers direction, we will probably never know. A very savey buyers agent would have seen through this right away.

]]> By: Jeffrey Kinghttp://www.biggerpockets.com/renewsblog/2007/07/27/income-real-estate-investors-learn-how-to-analyze-a-property-before-you-get-burned/#comment-84162 Jeffrey King Wed, 30 Jun 2010 22:37:20 +0000 http://www.biggerpockets.com/renewsblog/2007/07/27/income-real-estate-investors-learn-how-to-analyze-a-property-before-you-get-burned/#comment-84162 Determining the real returns an investment will provide can be daunting. As an analytic myself, I spent a good deal of time looking at my current investments, how they've performed, and how they've performed against my original expectations. In the end it really boils down to basic blocking and tackling. Rental income, Management, Taxes, Insurance, Mortgage, Vacancy allowance, Maintenance allowance, HOA fees, and deferred maintenance are the items that cause 95% of the pain if not properly evaluated within the context of the locality that one invests in. I spent a good deal of time creating my personal 'property analyzer', but have found that this free calculator does a pretty good job and also calcuates rate of return. https://www.meridianpacificproperties.com/properties/ayp If I picked the top 3 killers, it would be that I underestimated renovation costs (deferred maintenance), and didn't allow for enough vacancy and maintenance on an annual basis in my initial calculations. Determining the real returns an investment will provide can be daunting. As an analytic myself, I spent a good deal of time looking at my current investments, how they’ve performed, and how they’ve performed against my original expectations. In the end it really boils down to basic blocking and tackling. Rental income, Management, Taxes, Insurance, Mortgage, Vacancy allowance, Maintenance allowance, HOA fees, and deferred maintenance are the items that cause 95% of the pain if not properly evaluated within the context of the locality that one invests in. I spent a good deal of time creating my personal ‘property analyzer’, but have found that this free calculator does a pretty good job and also calcuates rate of return. https://www.meridianpacificproperties.com/properties/ayp
If I picked the top 3 killers, it would be that I underestimated renovation costs (deferred maintenance), and didn’t allow for enough vacancy and maintenance on an annual basis in my initial calculations.

]]> By: Bob Martinhttp://www.biggerpockets.com/renewsblog/2007/07/27/income-real-estate-investors-learn-how-to-analyze-a-property-before-you-get-burned/#comment-57558 Bob Martin Thu, 19 Jun 2008 11:37:57 +0000 http://www.biggerpockets.com/renewsblog/2007/07/27/income-real-estate-investors-learn-how-to-analyze-a-property-before-you-get-burned/#comment-57558 Current real estate markets nationwide have created countless opportunities for buyers looking to purchase real estate priced well under market value. Many buyers have turned to short sales, foreclosures and bank owned (REO) properties hoping to be able to purchase real estate for pennies on the dollar. The buzz in distressed real estate has been perpetuated by urban legends; someone’s brother’s, friend’s, uncle’s, co-worker’s dog who bought a home at 10 cents on the dollar. This buzz is further fueled by late night infomercials filled with testimonials of people who "bought a $500,000 home for $12" and then try to sell you the secret program that teaches you to do the same. Current real estate markets nationwide have created countless opportunities for buyers looking to purchase real estate priced well under market value. Many buyers have turned to short sales, foreclosures and bank owned (REO) properties hoping to be able to purchase real estate for pennies on the dollar. The buzz in distressed real estate has been perpetuated by urban legends; someone’s brother’s, friend’s, uncle’s, co-worker’s dog who bought a home at 10 cents on the dollar. This buzz is further fueled by late night infomercials filled with testimonials of people who “bought a $500,000 home for $12″ and then try to sell you the secret program that teaches you to do the same.

]]> By: Dimmahttp://www.biggerpockets.com/renewsblog/2007/07/27/income-real-estate-investors-learn-how-to-analyze-a-property-before-you-get-burned/#comment-53533 Dimma Wed, 09 Jan 2008 09:34:50 +0000 http://www.biggerpockets.com/renewsblog/2007/07/27/income-real-estate-investors-learn-how-to-analyze-a-property-before-you-get-burned/#comment-53533 This is really a great post. This will definitely help out in analyzing the property and save you before any mishappenings. This is really a great post. This will definitely help out in analyzing the property and save you before any mishappenings.

]]> By: Aaronhttp://www.biggerpockets.com/renewsblog/2007/07/27/income-real-estate-investors-learn-how-to-analyze-a-property-before-you-get-burned/#comment-50779 Aaron Thu, 09 Aug 2007 19:25:28 +0000 http://www.biggerpockets.com/renewsblog/2007/07/27/income-real-estate-investors-learn-how-to-analyze-a-property-before-you-get-burned/#comment-50779 The response of the agent was not surprising. For many less-savvy investors, this would have seemed like an incredibly attractive deal. Their response shouldn't come as a surprise, though- I just dealt with several brokers in NYC, and very little of what they say can be believed. Keep up the great work on your blog! The response of the agent was not surprising. For many less-savvy investors, this would have seemed like an incredibly attractive deal. Their response shouldn’t come as a surprise, though- I just dealt with several brokers in NYC, and very little of what they say can be believed. Keep up the great work on your blog!

]]> By: Indianapolis Realtorhttp://www.biggerpockets.com/renewsblog/2007/07/27/income-real-estate-investors-learn-how-to-analyze-a-property-before-you-get-burned/#comment-50610 Indianapolis Realtor Wed, 01 Aug 2007 21:51:46 +0000 http://www.biggerpockets.com/renewsblog/2007/07/27/income-real-estate-investors-learn-how-to-analyze-a-property-before-you-get-burned/#comment-50610 I think this is a great post and points out that especially in investment property it is "buyer beware". I think this also speaks to the importance of getting a real estate agent to work for you on the buying side of the transaction. The selling agent does seem to be stretching it quite a bit, but they don't work for the buyer. Get a good agent who can weed through the junk like this one and your life will be much easier. I think this is a great post and points out that especially in investment property it is “buyer beware”. I think this also speaks to the importance of getting a real estate agent to work for you on the buying side of the transaction. The selling agent does seem to be stretching it quite a bit, but they don’t work for the buyer. Get a good agent who can weed through the junk like this one and your life will be much easier.

]]> By: Las Vegas High Rise Mortgagehttp://www.biggerpockets.com/renewsblog/2007/07/27/income-real-estate-investors-learn-how-to-analyze-a-property-before-you-get-burned/#comment-50547 Las Vegas High Rise Mortgage Sun, 29 Jul 2007 01:22:54 +0000 http://www.biggerpockets.com/renewsblog/2007/07/27/income-real-estate-investors-learn-how-to-analyze-a-property-before-you-get-burned/#comment-50547 I agree with most all of your points. The average investor these days does not know how to properly analyze an investment property. I built my own excel spreadsheet to do it for me. If anyone wants it e-mail me at: Jfox [at] highriseloan.com -Jason in Las Vegas I agree with most all of your points. The average investor these days does not know how to properly analyze an investment property. I built my own excel spreadsheet to do it for me. If anyone wants it e-mail me at: Jfox [at] highriseloan.com -Jason in Las Vegas

]]> By: Rob Belandhttp://www.biggerpockets.com/renewsblog/2007/07/27/income-real-estate-investors-learn-how-to-analyze-a-property-before-you-get-burned/#comment-50528 Rob Beland Sat, 28 Jul 2007 01:47:47 +0000 http://www.biggerpockets.com/renewsblog/2007/07/27/income-real-estate-investors-learn-how-to-analyze-a-property-before-you-get-burned/#comment-50528 Just to bring in a different point of view on this Craig's List ad I'd offer the following...In my market, North Central Massachusetts, but I think it applies to a good portion of Central and Eastern Mass. as well, investment in multi-families including duplexes has been crazy lately.When it comes to marketing duplexes and multis such as three and four families, more times than not the debt service isn't even part of the equation. 90% of multis are selling to investors that are basically looking for an investment where they can park their cash and earn a decent return on it.Investors are not taking out 80% or even 70% mortgages, they are putting 50% and usually more down as the result of a 1031 exchange so their debt service is very low. Less important than monthly income is long-term appreciation and avoiding paying Uncle Sam.I've seen properties selling that basicaly break even cash flow wise but the buyer is able to sell a property he has owned for years and cash out and put his money into a solid multi with good tenants and he can make a solid 8.5% return on his investment.If an investor was cashing out and had $100K plus to invest, the numbers look a lot different...Just something to consider.... Just to bring in a different point of view on this Craig’s List ad I’d offer the following…

In my market, North Central Massachusetts, but I think it applies to a good portion of Central and Eastern Mass. as well, investment in multi-families including duplexes has been crazy lately.

When it comes to marketing duplexes and multis such as three and four families, more times than not the debt service isn’t even part of the equation. 90% of multis are selling to investors that are basically looking for an investment where they can park their cash and earn a decent return on it.

Investors are not taking out 80% or even 70% mortgages, they are putting 50% and usually more down as the result of a 1031 exchange so their debt service is very low. Less important than monthly income is long-term appreciation and avoiding paying Uncle Sam.

I’ve seen properties selling that basicaly break even cash flow wise but the buyer is able to sell a property he has owned for years and cash out and put his money into a solid multi with good tenants and he can make a solid 8.5% return on his investment.

If an investor was cashing out and had $100K plus to invest, the numbers look a lot different…

Just something to consider….

]]> By: Trevor M.http://www.biggerpockets.com/renewsblog/2007/07/27/income-real-estate-investors-learn-how-to-analyze-a-property-before-you-get-burned/#comment-50527 Trevor M. Sat, 28 Jul 2007 01:01:33 +0000 http://www.biggerpockets.com/renewsblog/2007/07/27/income-real-estate-investors-learn-how-to-analyze-a-property-before-you-get-burned/#comment-50527 Hey Josh,Great post. Kind of funny seeing how a real estate broker will "twist" the facts to put a slightly better light on it huh.The realtor didn't say... but his thoughts seem like he is saying it's the best deal in town for someone who decides to live in one unit and rent the other out (still not that great of a deal).When you compare it to a SFH like he is doing, a person living in a SFH for a comparable home may be paying something like $1k to $1500 a month (mort., expenses, etc.). So, I guess that versus the smaller negative cashflow that the duplex produces makes it a "good deal" according to the realtor. Terrible logic on his part... but for someone who wants to live in one half and doesn't care about living in a duplex... it may be a better deal than buying a SFH.Anyhow, like you said, realtors are there to sell real estate and it is up to us to determine what the right price is for our objectives. While I definetely wouldn't touch this deal as an income property investment... it may be a good deal for a first time home buyer looking to get into a home and decrease their monthly payment. (still need to be ready to make the full payment though when the other unit is vacant)Nice work on calling out the realtor by the way :)Trevor M. Hey Josh,

Great post. Kind of funny seeing how a real estate broker will “twist” the facts to put a slightly better light on it huh.

The realtor didn’t say… but his thoughts seem like he is saying it’s the best deal in town for someone who decides to live in one unit and rent the other out (still not that great of a deal).

When you compare it to a SFH like he is doing, a person living in a SFH for a comparable home may be paying something like $1k to $1500 a month (mort., expenses, etc.). So, I guess that versus the smaller negative cashflow that the duplex produces makes it a “good deal” according to the realtor. Terrible logic on his part… but for someone who wants to live in one half and doesn’t care about living in a duplex… it may be a better deal than buying a SFH.

Anyhow, like you said, realtors are there to sell real estate and it is up to us to determine what the right price is for our objectives. While I definetely wouldn’t touch this deal as an income property investment… it may be a good deal for a first time home buyer looking to get into a home and decrease their monthly payment. (still need to be ready to make the full payment though when the other unit is vacant)

Nice work on calling out the realtor by the way :)

Trevor M.

]]>