All Forum Posts by: Chris Lopez

@Laura S. check your BP inbox!

@Bo A Vanecko

I don't think there is a right or wrong way to calculate CoC. Most I've seen don't account for tax adjustments and home appreciation. CoC is a good snapshot. I'll send you a very good spreadsheet created by a local lender (@Joe Massey ), it's the one we use all the time. It's Denver specific and should give you a good starting point.

Look at Zillow's rent estimate (better than Zestimate) and surrounding rentals also. 

Who told you to target 10-15% CoC? Is it a local investor? a guru? someone in a different market and different time? Finding 10%+ CoC deals on the MLS is doable. We have some under contract now. Other factors that will make your CoC different from others:

• Are you self managing or hiring a PM?
• What are you holding in reserves?
• 15 yr or 30 yr financing?

Personally, I'm a fan of using cap rates. It's a bit more apples to apples that CoC when comparing properties.

Attached properties (condos and townhomes) are what we're focusing on. The returns are better than single family. Again, it depends on your investing criteria as to which is the right one for you. My attitude is that in 25 years, you won't really care which ones you have... just as long as you buy and hold!

@Bo A Vanecko Welcome to BP! Just as a general tip... if you haven't already, set up some keyword alerts for Denver and surrounding suburbs to receive forum alerts. I've received the most benefit from BP by reading the forums. 

I'm assuming with your analytical background, that you've started analyzing properties...but assumptions get me in trouble! Have you started analyzing properties? What type of CoC or cap rate are you looking for?

I do a lot of work @Charles Roberts because his focus is buying real estate for long term wealth. He owns a nice portfolio around Denver and has helped a lot of investors over the years. Since your goal is long term wealth buy and holds, definitely reach out to him and pick his brain.

What are your criteria for your rental?

@Jon Hand Welcome to BP!

It's probably like anywhere, some renters are some aren't. When I was a young bachelor, I rented rooms before. 

IF you want to get a feel for that market, hop on craigslist for the area you're looking at. A few minutes on there will provide a wealth of info to determine rents, quality of places, and supply and demand.

Also, consider Airbnbing some of rooms. Depending on your location, you could make a lot more money that way. I've rented out rooms on Airbnb for $30/night. It's a win-win. It's cheaper and nicer than a hotel and the landlord is typically making more money than a long term renter.

@Christy Browning, I'll echo the others - congrats on taking action and getting your first rental done.

When you say small multi family, what sizes are you talking about? I just found two weeks ago that I can access CoStar (which is a great commercial real estate info platform). I'm starting to analyze the 5-15 unit properties. From my past experience as a commercial broker in LA, 5-15 could have potential. It's too small for the commercial guys to "waste their time" on and it's non uncommon for residential Realtors to list those properties... and completely mis price it. 

@David Hooper have you talked with a hard money lender yet? My first step would be talking with a couple. See what their terms are and what they are currently lending on in the market. 

For hard money, talk wth @Justin Cooper at Pine Financial. 

How are you finding the deal? Have you talked with an investor-friendly agent in the area?

@Luke F. Couple of other thoughts:

I did recently find out that I can access Costar (which is the the best or one of the top data sources for commercial real estate). I'm going to start diving into the numbers because I want to get familiar with the 5-15 unit market. That size is often too small for commercial brokers to focus on and residential Realtors don't have the investing background for properties in that size.

To answer your original questions, why would anyone buy that duplex? Short answer, it's a very safe place to park cash and still make a good return. What are the options? The stock market that is at all time high? Other real estate that is approaching highs?

That's the market condition... it'll still beat 1% savings account at Ally bank. 

@Luke F. It's impossible to say if most multi family are breaking even. Breaking even at what percent down? Is it breaking even for a 3.5% down FHA - no. Is it breaking even for 20% down - some yes, some no. Is it breaking even for 35% down? No, it's cash flowing great!

@Charles Roberts did a webinar last week on multi family trends around Denver. Let me know if you want the recording.

@Bill S.'s post is spot on. 

@Jason Job I use a spreadsheet from Joe Massey (a Denver lender) to run numbers. It has a lot of built in assumptions for the Denver area. Let me know if you want  it.

@Jason Job Are you looking to only buy one place, that you'll live in (1yr+) and then rent out? Typically, nice places that you (the owner) wants to live in, doesn't make the best rentals because they are too nice. 

I'm assuming your 450k budget is the amount you can afford with a loan and downpayment, is that correct? A 450k place, won't make the best rental based on returns.

Best type of property? Depends on you and your investment strategy. We're seeing a lot of turnkey condos in Aurora that are making good rentals. Typically 220k and less.

Calculation methods? I love IRR for more advanced calculations, but use cap rate for quicker analysis. The condos I mentioned in Aurora are typically mid 7 cap rates.

@Charles Roberts currently have 4 properties under contract for investors in Aurora. One is 8.9 cap rate (great deal), but most are 7.4ish.

Have you started physically looking at properties yet? That'll give you a great feel for the neighborhood and help connect a lot of dots.