All Forum Posts by: Chris Stromdahl

Do you have to put down a down payment?

I am not a short sale/pre foreclosure authority on any level, this is why I ask.

I did not calculate your numbers, but it has been my experience from reading other deal analysis posts that if you are satisfied with you Cash on Cash return, then the deal looks good.

As for the 2% Rule, it is a solid guideline, but it should not be the sole basis upon which a decision is made. I calc the 2% Rule for approx 300 properties in my local market and discovered that there is a direct correlation between it, positive cash flow and of course, ROI. Pretty interesting actually. For my analysis, it was right around .9% that cash flow started to be negative.

Check this out: http://www.biggerpockets.com/renewsblog/2013/04/14...

Good luck.

I am in the process of looking at 37 separate counties throughout the US to focus on.

Initially, my wife and I are working together to research each of them at a 30K foot level.

My question is this:

Once we have narrowed our selection, what are the top five factors that you use to asses the potential a market has?

Example:

• Population growth
• Infrastructure build out plans
• Businesses moving to the area
• Crime
• Buy to rent ratios
• SF to MF ratios

And, what are some online resources that you use to do the research?

I intend, through trial and error, to put together a systematic process for completing this. I would like to be able to share it with any/all REI that have the same questions.

Thanks, Chris

Welcome Willie!

Great forum, full of information/insight.

I am newer to REI investment overall and much of what I have learned has come from the BP community.

Thanks, Chris

1- How do you find a Wholesaler ?

• Network at local functions.
• I Googled "seattle real estate wholesalers" and got a list of a couple companies. I would call them.

2- What kind of questions do you ask a wholesaler and what are red flags in a deal with a wholesaler. 

• I dont have an answer to this question.

@Account Closed 

I am newer to investing and putting together my deal analysis processes has been a focus of mine recently.

My calculations and based on the info you provided above:

5%@ 30 years

20% down

Property management, $0

Repairs/maintenance budgeting, $0

Utilities, $0

Vacancy rate, 10%

----------------------------------------------

Cashflow per door is $270

Cash/Cash, 15%

Cap Rate, 8%

The deal looks pretty good.

Personally, I budget conservatively and include expenses associated with PM, repairs/maintenance and utilities when applicable. $55K is a lot of money to have tied up, but you have to take subjective money into account as well. Is it a quality property? Well maintained? Something a tenant will like to come home to?

If you like, provide your email and I will send you the Excel spreadsheet I used to calculate this.

Thanks for the opportunity to contribute, Chris

@Mike Nuss 

Wow, great insight.

"Valuation is more important for short term flip style deals when the exit strategy will take place in a short period of time. Market conditions change, and so valuation becomes less important on hold properties. Honestly, FMV is an over rated piece of investing for hold properties. The income stream and the financing are the important factors."

While I understand your point, I do think that having a strong hold on what the most current FMV is for and B/H property is important for three reasons:

• Metrics, negotiating, making money when I buy

But, I agree 100% about becoming my own appraiser, and had not thought of using the closing sales data as a proxy for comps. Will definitely explore that more.

I viewed your profile and will be in touch.

@Jason Quick 

Thank you for the income valuation perspective. I will research/implement the tools I find.

@Susan Gillespie 

Thank you for pointing the sellers perspective, very good point.

I would like to make money when I buy. In my market, this is not possible. There is a perfect example in my neighborhood. The buyers paid too much for the property, are asking too much for the rent and it has been vacant since they completed the renovation.

I do think that there is opportunity to negotiate with sellers who's properties have been on the market longer than most and are in need of some repair. I think this is part of the point you were making.

The good news is that we have found a couple properties that are local where the numbers work out. The process continues.

Thanks for your input.

Found a couple of potential properties and completing some more defined deal analysis.

When calculating what my cashflow per door should I use:

Cash Flow Before Taxes?

or

Taxable Net Income?

TNI takes Principal Payment credits and Depreciation into account, and this makes a big change to the final numbers so I wanted to be sure.

Thanks, Chris

My deal analysis process continues. Having great fun and learning a lot along the way.

With that said:

Investment property in the area that I am focusing on is overvalued. 

Because of this I would like to be able to approach sellers in a professional manner to state my case for reducing the sales price.

I called my local county tax assessors office today and verified that they are mandated by the state to assess taxes based on 100% of the true FMV. However, then the representative told me that their valuations are approximately two years behind

What are some effective tools for determining the FMV for a particular piece of property?

Anything besides comparables?

Websites?

Rough equations?

Public/government information?

I would like to be able to plug in something to an Excel spreadsheet and go...

Thanks, Chris

PS. if you have any overall suggestions are how you go about deal analysis, your insight is appreciated and will be passed on to those that come after us,

@J Scott 

Thanks. What am I looking for exactly? I am going to watch BT's BP video in the AM, but if it does not include the mortgage payments, that is another piece of the equation that I have to put together.

I may not be thinking about it correctly though. Please elaborate if you can.

PS. I purchased your book on Rehabbing last week. Really looking forward to reading it.