All Forum Posts by: Austin Sine

Overpriced

@Dawn Burwell @Lee Hughes @Austin Sine

I consider taxes to be exorbitant if they crush the deal or are way higher than the average in the area. For example: I purchased a 4 family in East Hartford CT for 200K. Taxes are about $5,600 per year in the area that I am in. So that's a baseline for me. If I see a duplex in a few blocks over that has taxes of let's say $7,000 and the property is not significantly bigger, it would be a hard pass for me. The property tax per dollar of gross income is just too high. Sometimes these tax assessments can be fought and reduced, but your mileage may vary. 

I don't stay away from value add opportunities Austin, I actually prefer them. 

In terms of crime stats Lee, I use neighborhood scout, trulia crime maps, and local news. I only invest locally and know my market pretty well, so if it's in a particular section of town I don't even bother opening the listing. 

Hope that helps and thanks for your prior upvotes! 

Bad location and taxes.

@Austin Sine The property is not cash flowing from Day 1. Flipping has never appealed to me and implementing a business plan for a property in which there is negative or no cash flow for an extended period of time during rehab is basically the same thing and not something I’m interested at this stage of the game for me. Even if there would be a big pay day with a refi and good cash flow after the rehab is finished, not looking to take on all that risk right now.

@Filipe Pereira

What resource do you use to find out crime rates?

What tax rate do you consider to be too high to look at further?

Thanks in advance.

Wow, learned a lot from this one, my list was simple before reading it.  HOAs, landlord hostile cities (or states in the case of california), and foundation issues.  Recently I added in: stupid rental license zoning rules, like no more than 2 un-realted tenants (so I can have 10 in a 2 bd place, as long as 9 are relatives?, but only 2 people in my 4 bd. place?) or 2x parking spots per bedroom.(although I do try to mine those for the gems in the "green" zones)

  Or course the obvious, over priced, negative cash flow, high crime, etc.

@Austin Sine One of my hangups on deals is the period of time current owners have the property. If they are short term owners under 3-4 years I’m out .

Brokers and owners always respond what’s the difference ? And they have their opinion , but i only buy seasoned deals - where owners had the property for a while .

For one , if the owners are just looking to flip it , than I already know I am paying a premium . I don’t buy full retail price - even Potatoe Chips.

The other reason would be even worst - where they may be actual issues with cash flow , repairs , or any other reason they want to get out of.

I also fully understand there are different levels of investors , some buy full distressed , sometimes vacant or worst evictions required - they put in a few dollars , evict some and and make it cash flow positive - ,, good stuff ,, but not for me.

I may loose some deals but I’d wager 90% of deals someone buys where the current owner owns it less 4 years is a loosing deal.

Stay safe, Be smart

Severely under market rents across most or all units. This usually indicates that the condition of the units and quality of tenants do not warrant market or near market value for the property. 

@Austin Sine location

Pro forma model just hitting the market cap rate, bad area, old property, 5 year old or less property, High vacancy, small units, poor unit mix, no amenities.