All Forum Posts by: David Moore

I'm kind of baffled at valuations in general.  They seem so random.  A building two blocks from my four plex in Crystal, has a newly painted exterior, decent looking apartments the same size, but with worse looking vinyl windows, no garage, and rents at least $100.00 per unit below mine.  It goes on the market for $405K, and  gets an offer of $395K, settles lightning fast.  My building has all rehabbed units, new carpet, bathrooms, gutters...a lot of improvements.  

Two four plexes come on the market in Champlin.  They are similar to mine, and I check the rents for differences between here and Champlin.  The advertised price is $325K a building.  Rents are $150.00 below mine, and both get bought in one day...don't yet know the price.  One day!  And rents in Champlin, in that area, are lower than in Crystal.  

Now, I get a refi on my four plex.  I see the building that sells for $395K in the report, and yet, my appraisal comes in at $318K, right at the loan needed level.  

I thought value in commercial properties and valuations by banks or buyers was based on the numbers...what the property generates in revenue, as opposed to the usual criteria for SFDU's by banks.  Why are investors, appraisers, and banks not using simple math to value the building, like the books insist they do?

@Michaela G.

It would have been rich if Powers was from Austin, TX.

@Dan Bryskin

Great topic.  It is important to note the similarities, and dissimilarities with the bubble.  First, back in 2005-2008, there were no doc loans, option pay adjustables, and plenty of just ridiculous products.  Now we all grapple with Dodd Frank, and while that law will soon be gutted, there are more levers in place now to consider.  One factor is the baby boomers are retiring.  That means more homes on the market, with fewer buyers at some point.  Is it in 10 years, or longer?  No way of knowing.  The key is to know your own market.  But in the Twin Cities, I think the bull has some distance to run yet.  

Selling isn't necessarily smart. If your holdings have equity, you can secure HELOC's against existing equity, to acquire fix and flips. My style lends itself to research and using existing equity to seek out new deal possibilities in an area I have identified as 'my backyard', and we are moving towards fix and flips. But I am not going to be gung ho. Gung ho can require huge workweeks, and tying up work crews, and great risk. Slow and steady wins the race, IMO.

Everyone,

Try to remember that the lowest cap rate should be for a building that is turn key.  Also keep in mind that turnkey properties are gobbled up by the hedge funds, by the biggest buyers, who seek lower return and lower risk.  

In Crystal and New Hope, I won't even consider a building below a 7 cap, and I try to get them as close to 9-10 as possible.  Otherwise, there is not enough cash in the deal to justify it.  BTW, I own a 4 plex in Crystal.  

@Joe Villeneuve

I like the way you think, Joe.  Well, the way I see it...if I want to put a control mechanism on my account, why should I not be able to?  After all, BP does it, with Pro Level, Plus Level and Free.  Why not add to the functionality?  

I can then choose to bring all comers.  Or I can filter.  

Joe, I think we should start a competing site, and call it 'Bigger Wallets'.  What do you think?

@Steve Vaughan

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@Bryan O.

There is a nice way to disagree with someone, to validate the frustration someone feels, to be a community where as a fellow investor, we can empathize with someone, even if we don't understand.  Or we can rail on him...which is what some posters are doing, and frankly, you did.  I try not to run people down, is all.  

Bigger Pockets is always advertising that it is discussion about investing, without all the hype.  But they should add, 'but with all the typical harsh criticism of social media thrown in'.  

I applaud @David Zheng for being brave, to vent.  I sure want this to be a safe place for him to do so.  

@Bryan O.

He is sharing an opinion.  Why do you have to ride him so hard about it?  He is not pissed off.  

@Joe Villeneuve

You are changing the topic.  You asked how it was possible.  I told you how.  

@Joe Villeneuve

It is super easy.  It would be done in a person's profile.  Number of investment properties you currently - x.  Number of properties you have flipped - x.  Number of xyz - ?.  

You then choose a filter on your profile.  Only accept inbox questions from a person who  says in their profile they have met a condition you put in your filter.  You can choose, then to accept any and all questions...no problem.  Or, you can choose a filter...only question from someone who owns at least one rental, or done at least one flip....etc.  

It is simple functionality.