All Forum Posts by: Norberto Villanueva

@Jonathan Atkins - both escalators and though only able to directly control one, each should increase by at least as much per year.  It's estimated rental rates have increased 6% - 10% in the last year.

A mere snapshot in time, be careful relying on cap rate alone, which factors neither principal reduction or appreciation into the equation. Check out this article for an explanation http://smallbusiness.chron.com/equity-capitalizati.... 

This said, not only should a target cap rate of 4% be achievable, I also wouldn't expect the asset to produce much cash flow, which has me thinking something's off. 

Of course, each investor has their own tolerance for risk and performance expectations. Given current market conditions, not only have I found being able to project $100+ a door net cash flow without you in it to be acceptable, but above average. For obvious reasons, one should expect negative cash flow when house hacking, especially in this market. I know this seems counter-intuitive but, just think of it this way, even the investor must pay to live somewhere.

@Jonathan Atkins - thanks for posting. As @Ali Boone suggests, where there's no way to ACCURATELY predict the cost of hazard insurance, multiplying an asset's value by .0055 will get you close. And the assessor website she's referring to is here: http://land.elpasoco.com. Visit the site and enter the address you're looking for. You'll be taken to its information page, where the amount of taxes payable for the current cycle will appear below the "Market Information" section. 

And below it is a link to the County Treasurer's page that will share additional details.

If not mistaken, the Future Assumptions include projected rent and expense increases, for which we use 2% and 1% respectively.

As for Colorado Springs not "typically offering much in the way of cash flow", this is merely a matter of perspective and/or proper expectations. For example, the Public Record Property Information page displayed is for one I analyzed yesterday, where I was able to project $343 a month net. And keep in mind, facetiously if it makes a dollar after expenses, its cash flowing. As @Kyle Doney said, when buying to hold "if you continue to hold throughout any dips and can continue to cash flow", you'll generally be alright in the long run.

All the best!

@Jared Bouzek - Currently showing signs of softening, the Denver market may have reached its peak for the current cycle. With Colorado Springs typically two to three years behind, barring any economic change that is unforeseen given all the positive indicators to include population, job growth and more, the Colorado Springs market may continue to benefit from rising prices and rental values for the foreseeable future. 

All the best!

There are an unfortunate few, maybe many in our industry that know nothing about subject-to's, land contracts, lease options, master leasing...transactional funding. Educate and keep it moving.

@Scott Lepore - The problem with not having access to MLS data is the harsh realization that all comps are not created equal. Buying in and quickly cancelling a subscription to Privy after a much different experience, I'd beg to differ. To be fair, the representative was very understanding, explaining they have a little work yet to do in the Springs market to improve accuracy.

@Landon Mehlhoff - If MLS access is the only reason you'd get a real estate broker license, my two cents is don't. Partner up with and, most importantly, be loyal to an experienced and knowledgeable, investor focused licensee who will be happy to search, analyze, conduct walk throughs...just about whatever you need to succeed in exchange for the opportunity to represent you in the transaction. As a reminder, brokers don't get paid unless you close so the incentive is (usually) strong.

As for access to the MLS via Redfin, etc., keep in mind the data is usually limited to Active listings which, as important as that may be, is somewhat meaningless without the sold data necessary to craft a Comparative Market Analysis (CMA). This said and though not as comprehensive or reliable as a CMA, you may find sold comp data at www.findcompsnow.com, www.freshcomps.com and others.

All the best!

@John Nachtigall - great question. I say a combination of the following, "As long as we're operating in good faith, I am obligated to represent your best interests and submit any reasonable offer. This said, keep in mind the sales to list price ratio in this market is at 100%, sometimes more and has been since April 2016. I can't tell you how many offers I've submitted above asking price and lost. Our offer will include Inspection, Due Diligence Periods and other safeguards which will allow you the opportunity to terminate with cause and protect your earnest money. How would you like to proceed?"  

@Mike Miller - thanks for posting. I'm with @Paul Bowersthis may have been a case of seller's agent, seller's rules. And as for doctoring financials, I don't know about California licensing laws, but I'd bet misrepresentation is a punishable offense.

@John Nachtigall, it makes sense and is absolutely commonplace for sellers to require an accepted offer before allowing a walk through of occupied units. Not only is Quiet Enjoyment a legal construct, it is also hard to accomplish with every tire kicking lookie-lou trouncing through the place. Same with financials which, though necessary due diligence, is no one's business but an actual buyer's.

@Julian Diaz - thanks for posting. Ensure the agent/s on your team are investment savvy, crafting offers that are competitive based on the end goal. Remember, the sales to list price ratio has been at 100%, since April 2016. So it's important no, crucial you shoot first, ask questions later meaning, strategize, analyze and execute (offer!) knowing you'll take advantage of objection deadlines to perform your due diligence while operating in good faith.

All the best!

The trade-off I haven't seen discussed in this thread is the questionable upside potential of markets such as Pueblo, Indianapolis and similar ones where the 1% rent ratio is easily surpassed. 

Of course, you bought a cash flowing property I mean, what is the point in buy and hold real estate otherwise but, what is that respective market's long term play? How is their economy? What is their population growth (or decline)? What's the infrastructure like and is it being developed? 

WHY is the market rent so low?! 

These factors and others will affect real estate appreciation which, whether we like (counting on) it or not, is the 800 lb gorilla where building long term wealth is concerned.