All Forum Posts by: Account Closed

Here's something to consider if investing in the Greater Cincinnati market.

1960 Cincy population 500,000, now about 300,000.

1960 Newport population 30,000, now about 15,000!

Here's a thread discussing the market across the river.

https://www.biggerpockets.com/forums/48/topics/344...

http://www.usa.com/birmingham-al-housing.htm

As of 2010-2014, median price of a house in Birmingham is $86,100, which is lower than the state average of $123,800 and is much lower than the national average of $175,700. The Birmingham median house value has grown by 38.65% since 2000. The growth rate for the price of a house in Birmingham is lower than the state average rate of 45.48% and is lower than the national average rate of 46.91%.

 I am not against Turnkey concept it is just that I see a lot that use real estate concepts/terms in an incorrect manner to entice novice investors.

On your list you have cap rate.  If that means that as soon as you see a Turnkey provider mention a cap rate you know they are ignorant or a scammer and you do not do business with them then it is good to have on your list. 

If you think a 9% cap rate exists on a SFR Turnkey property and it is good then you should not be buying Turnkey properties. Refer your provider to me and I'll show you how they are trying to trick you.

You are saying cap rate is NOT a return exactly as I have always said.

Then you say it is a GUIDE/REFLECTION to a return.  How does that work? 

No cap rate is not another term for cash on cash. ROI is not another term for cap rate! Cap rate is cap rate. Quit trying to make it be something it is not.

So let's look at how you and @Curtis Waters are confused. 

1.  You are saying the cap rate is the return.

2.  A prudent investor would want more/higher return.

3.  So if cap rate is return and higher is better then you would pay more for more/higher for that return.

4.  10% cap rate means I am paying $100,000 for a $10,000 to get a 10% "return".

5.  5% cap rate means I am paying $200,000 for a $10,000 to get a 5% "return".

6.  10% is higher/more than 5%.

7.  So under your "return" definition the market pays MORE for less "return"????

8.  So under your "return" definition the market pays LESS for more "return"????

9.  This definition defies logic.

10.  Cap rate is not a return.

I will probably buy at a 4% cap rate over a 9% cap rate because it will most likely be more PROFITABLE!

 Well the problem is @Curtis Water is confused and thinks cap rates are a "return".

But lets look at what he is saying and you'll easily see where he is wrong.

1. $12,000 NOI bought in a 4.8% market is worth $250,000

2. Yet the SAME $12,000 NOI bought in a 9% market is only worth $133,000.

3.  The "return" is exactly the same at $12,000.  So how does it make sense that the market is paying more for the SAME return?  If you were guaranteed $12,000 in each case of course you'd want to pay less BUT it is not guaranteed and the market HAS deemed the possible $12,000 in the 9% market is ONLY worth $133,333.  

4. See a cap rate is NOT a return but the measure of what a market is paying for NOI.

1.   How does using ONLY operating expenses for one year period determine a return on your investment? 

2.  How did you arrive at a $250,000 purchase price?  What if I bought a $200,000 or $300,000 one?  What would that do with your numbers?

3.  Aren't you ignoring some operating expenses?

4. If you have a $12,000 NOI it would be worth $250,000! At 9% it is ONLY worth $133,333. Seems you are targeting properties that are in less demand. That doesn't seem financially prudent.

Sure in an appreciating market.  But it's work.  I let the market do my lift and toting.   

Try that in Indy!

  ;-)

Where are you getting cap rate comps on new SFR's? And what is the problem with a 4% cap rate anyway?