All Forum Posts by: Bryan H.

So, the process kind of worked. Without knowing anything about the area and never visited it, I was able to identify a property that needs work, with good schools, good income and good values. The house is $87k with an ARV of $150-$200k.

All in about 5 minutes.

So, I don't know anything about where you live. I don't know the market at all, but I want to see if the process works.

Can you tell me anything about the area this house is in?

I checked real quick, look at this and click on the "Median Sales Price" link. You will probably want to look at the top 2 green areas.

So, this strategy was presented by a guru at one of the REIA meetings I attended. I haven't tried it for real, but I did practice it and the strategy did point me in a good direction. You can use

1. Identify the median price for a home in your general area.

2. Find cities where median price is 10% less than that.

In theory this will find a sweet spot for the greatest amount of buyers.

Then search for properties in these cities that are for sale at 50% of the median price for the area.

These properties should be ripe for rehabbing & reselling.

I'm going from memory so I may be slightly off, but this is the gist of the idea.

Try it out and see where it directs you.

I understand CAP rates are typically reserved for commercial properties, maybe we want to call it ROI. The turnkey providers were calling it CAP rate, so that's what I went with.

I also understand the typical methods used to price a residential property if the buyer isn't interested in financial performance.

But if you view the available properties on turnkey provider websites, each area seems to return a similar ROI. If the property pulls more rent, the price goes up accordingly. I'm checking Michigan turnkey provider sites and they seem to all project a ROI of 12-13%.

Yes, its leased at $925/mo. I have local property management in place. The house has been rehabbed with new windows, flooring, doors, insulation, bathroom, H20 tank etc.

I'm looking at multi-family now and debating whether to sell and reinvest, or keep and add a duplex.

I'm contemplating selling a SFH I have in Michigan and using the money to put down on larger/additional properties. I have checked out a few of the turnkey providers that post on here and see CAP rates listed between 8-14% for a property depending on the area.

Can anyone suggest an appropriate CAP rate for SE Michigan? I'm interested in how I would price mine for sale.

Thanks

Break the deal down for me. What are the terms of the HELOC, your purchase price, rent rates, ROI, etc.

That's the problem with guru's selling everyone on paying 'below market' prices, buying with '20% equity built in', or paying '50 cents on the dollar'.

Typically, when you buy off the MLS, what you pay is the full market price for the property. You CAN buy properties that need work, but you are still paying full market price for it. When you repair & resell, then you sell at market price.

So the only person making any money for 3 years is your lender. If anything goes wrong, you don't have sufficient reserves. And the property is already in need of repairs.

Please don't do this.