All Forum Posts by: Brad Noe

@Natalie Allen I am a wholesaler from Louisville and I have more Southern Indiana leads than I can handle. We should talk! I'll shoot you a message.

Hey @Molly Weddle, I just sent you a PM. Might have a solution for you!

YAAASSSSS!!!! Two of my favorite podcasts coming together! Can't wait to give this a listen. 

THANK YOU BiggerPockets for everything you have done for me personally and for so many other aspiring real estate investors. You guys are amazing. Happy Thanksgiving everyone!!

@Caleb Heimsoth I don't disagree with you if someone is just throwing random predictions out there, but he did have statistical analysis to back up his statement and all he was saying was that based on those metrics (whatever they were, I don't remember), which precluded the previous Recessions and Depressions in the United States, the forecast looked like somewhere around 2030 it would be time for a major market downturn. And I'm not saying he's right or you're wrong, I'm just sharing my notes for discussion. 

@Michael Urti I will have to check our local statistics here in KY for comparison. I will have to say though, I think this could just be a symptom of the low inventory and inflated prices. Or maybe it's the other way around. Who knows...it kind of seems like the chicken or the egg type of thing, LOL.

Like any other prudent real estate investor, I am constantly monitoring and forecasting as best I can the health of the economy. I have to admit, my heart drops a little every time I see a blog or social media post touting a doomsday scenario the impending crash. 

This past week, I attended the National Building Material Distributors Association annual conference in Colorado Springs. A couple thousand buyers, manufacturers, and distributors of building materials gathered here to network and educate themselves on various topics related to the industry. One of the speakers that addressed the crowd was an Economist named Alan Beaulieu. I found his presentation fascinating, entertaining, and jam-packed with great information and tons of statistical analysis to back his forecasts. I took a lot of notes, and thought I would share those that were most relevant to real estate investing and the housing market.

- No reason for him to believe another recession like the Great Recession from 2008-2009 will occur for at least another 10 years. A repeal of Dodd-Frank is the largest threat to this positive outlook.

- He does predict a slowdown or "bump in the road" as he called it around late 2018 or early 2019.

- We all know interest rates will have to rise at some point soon. Now is the time to invest/borrow money to buy wealth-building assets. He was VERY adamant about this. And remember, this was NOT a real estate conference he was speaking at.

- Residential loan delinquency rate is well below the 10-year average and still declining, signaling a strong and healthy housing market.

- One trend going on now and continuing in the future of housing he pointed out was demand for rentals in urban areas.

- Apartment vacancies are growing in many markets. Large multi-family is starting to look overbuilt.

- California, West Virginia, and Illinois have declining populations.

- Southeastern US, namely the coastal states, are showing strong population growth.

- Toronto, Vancouver, and Seattle are bubbles that will eventually burst and could cause temporary volatility in their respective regions.

- US housing prices projected to continue upward trend overall until 2029. (Again, a repeal of Dodd-Frank would jeopardize this trend). 

- I wish I would have written down his reasons for it, because he had plenty of slides and stats to back it up, but his boldest prediction which he was very adamant about was that the next legitimate Recession or even possibly Depression will hit sometime around the late 2020's to the early 2030's.

Cheers!

Thanks @Justine Scheuher! @John R. Whittington sent you a DM.

Thanks @Andrew Johnson! Great advice there. You confirmed that some of my fears/suspicions may be valid. Might be getting in over my head on this one. 

@Terry Miller @Account Closed His explanation is that he and his wife (who manages this plus 50 other units they own) are burnt out landlords. They don't have the time or motivation to do what they need to do to flip the vacant units in a timely manner. This property is not listed on the market, he just said that I sent him a postcard at the right time as they had been talking for a while about "getting out". 

But still, I agree, there has got to be more to it then what is on the surface here. I don't think it would be hard to get this thing fully occupied - it is in great condition and affordably priced. What I am skeptical about is the whole financing piece and the tax credit program. Just a lot of gray area there that I need to uncover the specific details on. 

Thanks for your help guys!

Good stuff, @Joel Owens, thank you!

When assigning a deal on a commercial property, is it the same as with single family? I just get it under contract, find a cash buyer to sign an assignment contract, and keep the difference at closing?

HELP!

I will try to keep this as short as possible...I've been investing for a while now but have only dealt with SFR's. I have recently uncovered an off-market deal on a 29-unit apartment complex and need some help looking at the numbers and the potential pitfalls.

A little background info: this property has been in a state government-backed tax credit program for low income housing. It is a 15-year program and it only has two years left. Once out, the owner says there is great value because now we can go after market rents. I am skeptical, however, because it is in a blighted area so I don't think we can get much more than they currently are getting. Otherwise, the property has been IMPECCABLY maintained, especially for the area that it's in. And it's an old brick-and-mortar school building so it is solid as a rock, and another plus is it is fully fenced with secured entries.

Two things I am uncertain about are the details of the government program it is on, what it takes to stay in/get out, etc. The other being the financing piece. The owner says that we would assume his existing mortgage in which he owes roughly $16,000/unit @ 7.75%. Then he would add another $12,000/unit on top which we would have to come up with financing for. Why would he say that? Why wouldn't he just offer us the total amount of the two combined ($28,000/unit), so we can get one loan for the whole deal and pay off his mortgage and he keeps the difference, just like buying a house?

Here is the quick-and-dirty analysis:

Current income (6 vacancies): $10,034/mo.

Mortgage on existing note: $4,142/mo.

Taxes: $566.67/mo.

Other Fees and Permits: $125/mo.

Insurance: $1,000/mo.

Maintenance (2016): $2,300/mo.

Cash Flow: $1,900/mo. or $22,800/yr.

At full occupancy, income would be $13,184/mo., making the Cash Flow $5,050/mo. or $60,600/yr.

Assuming we pay all cash for the $12,000/unit ($348,000) that he is asking, ROI would be:

Cash On Cash Return: 6.5% (as is) or 17% (full occupancy)

Cap Rate: 9% (as is) or 14% (full occupancy)

Thanks in advance!

Cheers