All Forum Posts by: Cory Carlson

What kind of data????? Income, property data, income, age, level of education, beer or wine drinkers? Haha 

There’s resources for data for all sorts of stuff. What’s your goal? 

A few things i noticed that could easily skew my numbers: 

1. In my area lenders use 5% as underwriting for vacancy. I used your 7%.

2. 12% management is also high for my area. We see 8% until you have several properties with the management company and this can get as low as 6%. I used your 12%. 

3. I do not know your effective tax rate. In Oregon we add 9% to our federal tax rate for income taxes. I used 34% for the effective tax rate. 

4. Also unknown to me is projected appreciation. I usually use 3%. 

Now as far as what the numbers say: 

This properties pretax cashflow is $3097 a year. Also known as a Cash-on-cash of 9.9%. Not bad!

After tax return and pay down on equity is 12.44% and after accounting for 3% annual appreciation in your first year total return would be $24.04% 

Disclaimer: This is not to be used as investment advice nor procure your purchase of this investment. Merely an example and run of YOUR numbers on MY software. 

Depends on your goals. We often see proper use of leverage allows more lucrative properties and compounding returns for those trying to build wealth with larger multifamily property. We call this metric After Tax cash flow plus pay down on principle. fancy words for return and building equity. 

OR

Pay cash. This is a little tough as, there are less tax benefits, the property acts a little like a savings account (yes it cash flows) that could depreciate with the market, but of course appreciates over time. 

Even the wealthiest clients of ours borrow money for their real estate investments, it just pencils. Even with the debt service from purchasing the larger property the after tax return compared to a small cash multifamily is usually better. I agree with those saying only to use leverage as a tool that aligns with your risk tolerance. 

What data are you looking for and why? Co-star is a great resource but not cheap. 

If your are looking for something to compile property information I created my own data base with property information from Chicago title. I made the spreadsheets like-kind for the different counties and uploaded it to a database called ClientLook. This allows me to search properties based on assessed value, sale date, sale amount, loan amount, etc, and links property owners (and their home/business addresses) who may own several properties. 

Have you considered selling several of your current holdings (perhaps SFH's) and a 1031 (if you have capital gains to defer of course) into a larger multiplex? A proper analysis would show your returns on invested equity of each SFH AND cumulatively which could be compared to the returns of a multimillion dollar apartment complex. We usually see the returns vastly improved and better use of your time. Managing one large with property management is easy compared to 4 SFH's and if it pencils better for your wallet!

Cory 

If you have the money to put down and are serious i would find a broker with experience. They can be worth their weight in gold. Proper analysis takes time and experience to develop the skills. As my principle tells me, garbage in - garbage out. Also, they have all the inside knowledge on the market and what's coming soon. If you have the cash and are serious about building wealth in Real Estate you are not waisting their time. We help both first time & savvy investors quantify their invested equity and plan the ideal buy/hold/sell situation that coincides with their risk tolerance and time horizon. 

Hello, 

Looks like you have been offered help from several brokers here in town. I also live in Bend and specialize in the small multifamily market(s). So if you are still interested in purchasing a duplex, 

Cheers and welcome to the neighborhood!