Lender · Huntington Beach · Member since 2008 · 120 posts · 57 votes
7y
Well I am not member myself, but I have to say that I am impressed with the worksheet. I think it is fairly accurate. In areas like Beverly Hills or Newport Beach, the capitalization rates are so low, it does not make sense for most investors except say Doctors or high income professionals who can depreciate the property and are in it for the long run. It is simply a better return than putting it in the bank. Though it does fit many investors. I am a lender and have been developing properties in the area, 2 in Laural Canyon and one in Encino. What comes to mind to me is the amount of money that can be made buying raw land in the area and building ground up. The profitability of doing so in that area are amazing really.
Rental Property Investor · Greater Boston Area · Member since 2018 · 258 posts · 105 votes
7y
@Jene Goshay In short, not a good deal - I'd keep looking.
Also, if your purchase price = down payment, I'm assuming you're paying cash. If so, you shouldn't have $40k in closing costs. $2k in repair costs is arbitrary on a ~$1.9MM property. Also, your vacancy, CapEx, Repairs, and Property Tax estimates are all too low, in my opinion. I don't see you paying ~$2,400 per year in property taxes on a $1.9MM property...