All Forum Posts by: Account Closed

@Account Closed I'm saying the cap rate on the rental property I'm considering is 8.7% which makes sense as being a property to consider.

What type of properties are you looking for?  I don't think it was noted anywhere.

Depending on the type, size, and your investment objectives, you could probably eliminate a lot of markets without doing much work.

  Given all that the cap rate math certainly makes sense. 

Ohio is great, tons of competition, high cap rates (10%-30%), 

Adam Adams

lets start by looking at the numbers.  Your projected rents are 3000 per month or 36k per year in gros rents.  Subtract out all of your expences, taxes, insurance, vacancy, maintance, lawn care snow removal ... roughly 50% of your income is the rule of thunb but run the numbers.  It leaves you with a net of 18k per year.  With the repairs mentioned i think your rehab budget is way to small.  I would gues you would be closer to 100k posibly, because you are spliting the utilities and updating you are also going to have to build firewalls to seperate each unit per code. It depends on what you do.  Lets say you buy it for 100k put 100k into it on the rehab and rents and expences net you 18k per year.  18000/200000 = .09 or a 9 cap.  Not the best deal for the risk and work required.  If you only put 50k into it, its a 12 cap which is beter, but again its a lot of risk.  Also consider comercial space normaly has longer vacancies between tenets, and the property taxes will uncap once you buy it and could raise your tax bill significantly.  Keep digging into the numbers, and be conservative on your estimate, make sure you cover everything.

Try Some markets in Texas, in older neighberhood or college towns Ohio or Indiana, Might work

It seems both the parties are talking about their perspective of return. Both are correct. The argument is why the market pays more for less return or vice versa. Cap rate , CoC are all only good as your inputs and relevancy to your situation.

  I am working up a package to show lenders, 

Pro Forma Cap Rate: 9.30%

Purchase Cap Rate: 38.03%

Pro Forma Cap Rate: 10.66%

Purchase Cap Rate: 28.89%

Hey Bob, 

I'm looking for a buy and hold investment and appreciation is just icing on the cake. I actually prefer that it isn't a fast growing city because it means it doesn't crash as hard in a down turn.