All Forum Posts by: Eric Lefteroff

I think the most useful aspects of a cap rate are 1) as a market comparison for your property, and 2) in a historical context to determine overall market strength.  

As for #1: As you know the Cap Rate equation looks like this: Cap Rate = NOI/Value. Using cap rates as a comparison of similar properties in the area can give you an idea of how efficient your property is. So, if you took the average Cap Rate for similar properties (equation constant) and used that in conjunction with your property's NOI (another equation constant) you will get a number for your properties potential Value (the variable in this case). The equation looks like this Value = NOI / Cap Rate. If your property's Value is lower than similar property's Values then your property's rents may be too low OR your operating expenses may be too high OR both.

Now for #2: Looking at cap rates in a historical context gives you insight into how hot or cold the market is and, therefore, gives you some idea of where in the real estate cycle the market may be.  This allows you to determine if you want to sell in a hot market or a cold one and likewise buy in a hot market or a cold one, etc.  Extremely low cap rates in a historical context could mean a bubble and vice versa.

I hope this helps.

Hello Cash Buyers.

What is the most important criteria you use when buying from a wholesaler. (Criteria that you use for both the wholesaler and the property).

@Ross Webb Congrats on your rehab!  How did you stage the work?  Why 2 years as your timeframe? (Assuming it is for tax reasons). Did you perform any of the work yourself?

Thank you @Greg Dickerson

Is anyone from the Seattle Metro Area willing to share rehab cost numbers? Or point me to a resource to find them? (i.e. How much for linear feet of cabinets, counter tops, etc. How much for sq. yards of carpet, painting, doors, bathrooms, etc. Exterior and interior costs.) Assume a median level remodel. Not high or low end.

Is anyone from the Seattle Metro Area willing to share rehab cost numbers?  Or point me to a resource to find them? (i.e. How much for linear feet of cabinets, counter tops, etc.  How much for sq. yards of carpet, painting, doors, bathrooms, etc.  Exterior and interior costs.) Assume a median level remodel.  Not high or low end.  

Can anyone tell me what the typical response rate is for direct mailing potential sellers? Assume 5 mailings to the same potential seller. Also, what is the conversion rate for the same? Also, what type of potential seller is best to direct mail to? (i.e. absentee owners, vacant properties, inherited properties, cash buyers, free and clear, etc.)