All Forum Posts by: David Moore

Here is the link to meetup.  I hope to see you there!!

https://www.meetup.com/Bigger-Pockets-West-Metro-M...

To all,

The first West Metro BP meetup is scheduled for Tuesday, February 27th At Davannis in Golden Valley, MN starting at 7:00 pm (in their party room).  I will also put this on Meetup, so look for that by sometime tonight.  We have capacity for 50, so make sure to RSVP on the meetup.  

We will have a get to know each other session for about 30 minutes.  After that, I'm working on bringing in a guest speaker to tell us about their real estate business.  We'll also have some time for networking.  Look forward to meeting each of you at the new West Metro BP Meetup.  

 I'm meeting with a mentor locally before I go into the bigger stuff.  Too many details I don't know.  

@Brian Burke

I really don't use this term much, but twice in one week....a scholar level analysis.  Wow, love it.  But another quick question.  How on earth, in your due diligence, can you get the seller to divulge what his trailing 12 months expenses are?  Some you can lookup, sure.  Some you can extrapolate from the broker.  Do you request a schedule E,  and if the seller owns more than one property, how do you untangle the cords of his/her financial web?

@Brian Burke

Will you please explain what you mean by the terms 'annualized T-3 income and T-12 expenses'.  I doubt most people know....I do not.

@Russell Gronsky,

Two more thoughts. Not only should you not fall for this hijinx on behalf of the broker, you should also examine the leases, what their present rents are, and how many of the units were very recently rented, and to whom. I've found shady deals where the CAP was pro forma, and the seller had a fire sale on rents, putting everyone except Charles Manson in their apartment, to make it appear more profitable than it is.

The second thought is that comps do you no good at all in an apartment building. What the building generates in cash is what the bank, and what the assessor will value the building at. One thing that does help set the market, though, is the CAP rate that similar style buildings are selling at. No matter what your lowball offer, if the other 10 plexes are going 5 cap, likely this one will too.

@Shaidah K.

That is a scholarly answer.  I think you've answered your own question with that analysis.  

I've got a free and clear property right now that I'll borrow equity out of, and I'm selling one this spring, and will use those amounts to acquire, hopefully, an 8 unit or higher apartment building.  I'm a value investor, so I look for properties that have lease loss, or some other add on gain that I can leverage after I buy it.  

Have you considered investing in other parts of Canada, such as an emerging market, where your acquisition costs could be lower?  I don't like investing outside my region, but Vancouver sounds pricey.  

@Shaidah K.

There are a lot of details we don't know about your situation.  Is your current home on a waterfront?  How much have waterfront properties (I'm assuming waterfront) been appreciating?  Can you check for other sold properties in a one or two mile radius of your home.  

Also, consider that we in the USA have a perspective that is hard to forget.  Namely, our personal homes are exempt from tax on the first $250,000.00 of profit if single, and $500,000 if married filing jointly.  The tax man in Canada takes a different slice of the pie than here.

Another thing to consider is that the economy of your region of Canada, and price appreciation, is different from the USA.  Most people I talk to believe we are at a market peak.  So our perspective is tainted by that common understanding.  Who knows if Vancouver is anywhere near peak?  Selling now could be the wrong time.

I personally pay the minimums on my rental properties.  I don't want sunk equity.  I want to use equity fund more acquisitions and increase cash flows. 

@Matt R. @Ricardo P.

I would not drop it.  Whose apartment is it anyway?  If Ricardo wants to use that unit for storing rubber chickens, it is well within his right to  do with his property as he wishes.  There is no compulsion at all, here.  Imagine if he drops it, how difficult this tenant becomes going forward.

There is one factor to consider here, from the tenants perspective....food for thought for future years.  The 8 year old kid could be what is making the dad belligerent.   Changing schools in the middle of the year can be an issue.  In future situations, wait for summer to do this type of turnover, if possible.

@Ricardo P.

Contrary to some advice, do not lawyer up.  I just looked up the California process.  This appears to be a nonsensical move by the tenant...as if he can start this process.  Check out California Tenant/Landlord laws and follow what it says.  Educate yourself...don't panic.  Your tenant does not initiate this process, you do.  Sounds like someone is wading in BS.

Check out http://www.courts.ca.gov/27766.htm

I try to never make claims on my rental properties.  Consider your strategy here.  I bet NREIG would insure you.