All Forum Posts by: Uwe S.

Forgot one opportunity in Germany against the US market, tenants in Germany pay all of her utilities. So if the rent is 400 Euro thats the net income for any investor only the PM marge should be subtracted and some maintenance reserves.

Included in the utilitys of the tenants in Germany:
- propertie taxes
- insurance for propertie
- water
- heat (gas, oil)
- janitor fees

The investor or his PM make an utilities statement each year for the previous year and the tenants must pay these then. Mostly the tenants pay a firm utlities fee each month to prevent high additional payment for previous year.

-Uwe

Ziv Magen, agree with your statement of Berlin and other big towns.
Checked just Leipzig and found properties in need of rehabilitation from 42k Euro but for a nice rehab for an 4 unit in Germany you will have high requirements so I assume about 25k per unit for the rehab. Complete house price is 142k Euro then, to much for me.
Found also an rehabed house with 6 units asking 198k Euro stated CAP rate of 8.5% located in a suburb.

So yes you can get some decent deals but need a big pocket to buy it.

-Uwe

Thanks Steve Babiak to bring me in.

If you want to park your money at very low CAP rates <6% but with actual almost no risk then take Germany. I agree Ziv Magen the tenants are almost frugal.
Only problem is you need much more money to buy an propertie only one example in Berlin you must pay for an 11 unit at least 850k Euros with 5.7% CAP rate. If someone ask me to buy I would say: "Thank you, no. Nothing at all."

-Uwe

Hello Tommy, welcome at our BP world.

Unbelievable but a studio rent is really up to $800 in this area. All other rents seems also okay, checked with Rentometer.
Propertie is listed at loopnet since 09/2008 this is a very long time.

The expenses showed at loopnet are absurd at $480k gross only $120k. That can maybe for this stated year 2011 but in a longer lifetime you should look at min 55% with this propertie and in this case the price should be only $2,2M in my mind.

If you want to pay in cash it can be an deal but with financing you will have an drag.

Do you got the P&L of the last 3 years better the tax statements and rent rolls? Ask about the actual PM and call him they can tell you more about this propertie.

-Uwe

Hello Craig,
a $120k duplex in Ohio is really a rare one and with only $1,200 maybe $1,400 monthly income not the burner.

In order to achieve a good positive cash flow with $1,4k in rents you must pay 30% down with my calculation. I would look unlikely to that deal.

-Uwe

Hello Navi,
My first question would be : "What is the actual NOI of the business each month?". You should pay not for future income!
Rental income of only $1,700 gross monthly is not a lot all the more on a $500k propertie.

A commercial loan is feasible but if you have not much money you should try to get this propertie with (o)wner (f)inancing maybe with a second mortgage of min 25% or full OF.

My standard is to get 10% CAP on properties, with a $500k sales price I must look at $4,160 NOI each month.

-Uwe

HUD propertie I guess, listing period = exclusive - so only owner occupant, non profit organisations or government entities can offer anything.

-Uwe

Steve Babiak,
You use the 2% rule I the "simple" 50% rule for an rating of an propertie. You right some properties have high asking prices and with my calculation there will be much more knocked out but there also very good opportunitys on market especially in the northern states.

Patrick,
what is your exit strategie for this propertie? Long time hold or rehab and sell?
If you want to rehab, maybe fill with tenants and sell you should check your market how long would this propertie stay on MLS before you can sell.
How long is the other one on MLS? Any price drops? Its really interesting to show this before get in!
As licensed contractor you have an big benefit you can stay away from overpriced expenses for the rehab. If you can do this purchase and rehab without an financing you have a strong point regardless of whether a flip or long term hold.

-Uwe

The 50% rule is for me a simple check, is this propertie gainful with my wanted CAP rate or not.
If not I go away, if yes I would check more. For long time holder is this the best rule I know.

-Uwe

Patrick,
You was with an contractor at the 4plex or you made your estimate by yourself?
Vacant properties are not my cup of tea you don't have to pay for any future numbers.
If I take your estimate of the rents = $2,400 per month or $28,800 per year gross. With simple 50% expenses per year you look at $144k with a 10% CAP. Now you should take the 70% of ARV rule = $101k minus your estimated rehab of $52,000 so its purchase price for me not more than $49k.
It depends on the age of the propertie if you should use a 50% expenses rule or better a 60%, I take always 60% if older than 40 years.

-Uwe