All Forum Posts by: Brad E.

I can't comment on your deal, but I personally use LendingClub.com, participating as a lender. I'm guessing you are looking to borrow.

I like the site from the lending side  but haven't tried it as a borrower.  The technology is solid though and it's easy to use. I think your rates a going to be a little higher than with a bank. You might look to hard money but I don't have any experience there to offer any advice from. Good luck.

Thanks for the feedback.  I was leaning towards accounting for it as upfront cost but really wasn't sure of the best practice.

Haven't got an estimate yet but a local friend with a similar size house just had his replaced and shared with me what he paid.  Point taken though.

Hi @Immanuel Sibero its a duplex. Thanks for the suggestion.  Will definitely look into comparable.  Cap Rate is only one of the metrics I'm looking at.  From what I've read I thought it applied to any multi-family, or any investment really.   

@Ethan Atkinson - I'll give you a shout now.

Hi. I'm looking for some help understanding the best way to factor in roof replacement cost, at a given time in the future, to the offer price. I would categorize this as CapEx expense of course but my question is around timing.

To be clear, what I am solving for is the offer price on a buy and hold duplex that will need a roof in 3 years. Hold time will be 15 years

If purchased today, my assumption is that in year 3 I will need to replace the roof, which I'll estimate at $8K.

So in working up an offer I am not sure how to account for this cost. All of the calculators I find have an upfront 'improvement cost' field, but that doesn't seem appropriate given that the roof still has 3 years useful life. (This is really a question, should I include it in upfront cost?) Some have a monthly CapEx% rate which is where it seems more appropriate. However, that doesnt seem to paint an accurate picture either since the cost will be incurred in year 3.

My thought was that I should spread out the cost over 3 years so that when it comes time to replace the roof, I will have that money in reserve. So $8K/36 months = $223/month in additional operating expense for the first 3 years. Doable, but again seems to skew the cash flow numbers inaccurately downward.

Here is where I get unsure of myself - In year 3 I will have purchased the roof. Once this occurs necessary monthly CapEx % reserve should, in theory, drop dramatically. I guess that can only be a good thing for the owner, but I dont understand how to project expenses out past year three with accuracy.

So, the question is - do I calculate roof replacement in to a lump sum up front cost, which will lower my offer. Or spread the cost over 36 months and reevaluate CapEx at that time. I havent tried to do the latter yet, but I am assuming it will give me the ability to present a more attractive offer to the seller as the cost will be spread out over time.

A final thought I had was to spread out the expense over the entire time I plan to hold the property, let's say 15 years. By the end of year 15 I will have recouped the roof cost, but it will be a big hit to the bank account in year 3.

Hopefully that all makes sense.

Curious as to how some of the more experienced folks handle this. Thanks in advance.

Hey guys. I'm looking at a multi family property here in Athens and am trying to calculate an offer price. There seems to be much online debate on the value of looking at the Cap rate when making a purchase decision. I'm not trying to get into a debate here.

What I am hoping is that someone can share what a decent Cap rate is for this area. I've talked to several agents, about this and other properties, and none seem to be able to tell me what an average/good Cap rate is for the area.

Can anyone here speak to this? Or share with me a good source to find it?

My thought is that an experienced agent/broker would know, so I'm guessing I just haven't found the right person yet.

Any light someone can shed on this will be greatly appreciated.

Thanks @Bryan O..  I'm definitely reading the forum here.  I'll check out that book also.  

I ended up purchasing a udemy course.  It gets good reviews and was on sale for $10.  

Hi all - what recommendations do you have for online courses about real estate investment analysis?

I've looked on udemy, kahn etc and there are of course a wide array of options.  Wondering what courses folks in this community have found valuable.  

My experience level is novice, but I do have a business undergrad, so I am familiar with basic accounting/finance.

Thanks.

Hi @Nathan Gornto! Welcome to BP. I'm also in Athens and am planning to join the next Athens REIA @Ethan Atkinson organized.  This will be my first time going and I'm super excited.  Hope to see you there.  

Hi @Dzmitry Zakharau and @Ethan Atkinson.  

I haven't connected with a CPA yet so I really appreciate the recommendation.  I drive by 'the tax shelter' all the time.  I've thought several times about stopping in but have never taken the opportunity. 

Thanks to both of you!