All Forum Posts by: Immanuel Sibero

@Casey Miles

I second your post.

@Account Closed

Bob, keep it coming. I'm a newbie with some investable funds wanting to get into MF/apartments. I'm glad I ran into your posts as I can't tell you how much I have learned from you, especially on the subject of CAP rates!! I'm also amazed at the number of people (and I mean real estate professionals/investors and the like) with misconceptions about cap rates. Hopefully I will be able to CAPitalize on these misconceptions..... ok, sorry that was a lame pun. lol

Immanuel

@Steve Sprowls

Hello Steve,

I would check out meetup.com and do a search on "multifamily" within a certain number of miles from Ft Worth. You will find various meetup groups and find out when they meet. You can then join and meet lead investors, sponsors, etc.

http://www.meetup.com/find/?allMeetups=false&keywo...

Hope this helps,

Immanuel

@Michael Episcope

Great post because many investors do not take into account the tax aspects of their investments. One quick comment/question on the comparison that you illustrate above:

From a tax perspective, most investments yield two types of taxable income: ordinary income and capital gain. Ordinary income is generally taxed higher than capital gain. In the illustration above, the tax rates are lower for the real estate deal because the income is a capital gain (i.e. not necessarily because it is "real estate" related). This scenario could easily be reversed by comparing the tax rate on gain from trading (i.e. buying and selling) the debt instruments which would be lower against the tax rate on rental income from the real estate investment which would be taxed at a higher rate (i.e. ordinary income).

It doesn't seem fair to say that a real estate investment is taxed less because its capital gain tax rate is lower than the ordinary income tax rate of a debt instrument. Under the current tax environment, capital gain tax rate is always lower than ordinary income tax rate. This is generally true for any investment not just real estate.

I do agree with your statement that real estate investments offer other "favorable tax-related benefits beyond simply how gains are taxed" which could potentially result in less taxes.

Immanuel

@Jesse Chunn

Welcome Jesse. I'm a newbie in the DFW area as well. This is a great thread as I too have some investable funds and have been thinking - why not multis?. I just started investing in real estate the last two years with 2 SFHs and have been hanging out on BP a lot - it's an amazing resource. I have also gone to a few REI meetups. While most of the participants at the meetups are in SFH, I have run into a few who have done multis. I get the impression that the multis in the DFW area are currently overpriced, maybe even in a bubble like environment. This may explain the lack of attention you are getting from the brokers. My concerns specific to our market are:

- We may very well be in a bubble, there are many apartment complexes in development right now. I see them everywhere in my area (i.e. north Carrollton and anywhere north of Dallas).

- Interest rate is at historical low, so low that the only way to go is up. When it does go up (i.e. not if), it will surely put upward pressure on cap rate and therefore downward pressure on valuation of apartment complexes.

This is enough to put me on the sideline and just watch for now, but I would love to hear others' take on apartment investing in the DFW area. Again I'm a newbie, so not sure if I'm looking at this correctly.

I'm following this thread and hope you will keep us updated with your progress.

All the best... Immanuel

@Joe Henry

That's great Joe.... Time to put it to good use :-)

All the best!

Hi there,

Excel is a great tool for this kind of analysis and I use it often for various things, not just real estate analysis (I'm a real estate newbie). Just a couple of comments:

- I usually see Capital Expenditures set up as a component (i.e. percentage) of operating items, much like repairs, vacancies, PM, etc. The worksheet sets up Capex as a component of "All In" (i.e. acquisition related) which will skew the metrics normally calculated based on "All In" (i.e. CoC).

- The closing costs tab and capex tabs are very detail. Given that this is a tool to evaluate deals, are the detail breakdowns necessary? When I read the subject of the initial post, I envisioned a short, compressed, quick worksheet to determine if a deal merits further investigation. When I saw the detail breakdown of closing costs and capital expenditures, the worksheet looked more like a tool to "account" for a deal, not necessarily to "evaluate" a deal.

Again I'm a newbie, I'm learning ... :-)

Thanks,

Immanuel

Things must be really bad in CA. Even the earthquakes are moving in to TX.... ha... just kidding.

Welcome to Texas, let's make this state even greater!!

Chris Soignier

Thank you!

@Charles Parrish

Thank you!

@David Rambadt

@David Rambadt

Thanks for the insights David. Yes, my focus is definitely buy and hold but I can see that knowledge of certain aspects of wholesaling and fix/flip can further enhance the return on buy and hold strategy. As a matter of fact, I bought my second rental from a wholesaler (one of the more prolific in DFW). It's in a good neighborhood, needs minor cosmetic repairs but even these repairs can be delayed somewhat because there is already a tenant, so it's instant cash flow. Rent-to-value is 1.4%, it's decent for a good neighborhood in DFW. This was my first exposure to wholesaling, the process was very smooth, very little paperwork, but I knew that the bulk of the work had been done by the wholesaler (marketing, scouting the property, negotiating the price, etc). This experience made me think that maybe I could do more for my buy and hold strategy by finding these properties myself. I can definitely see how this would enhance my rent-to-value ratio.

As far as rehab goes, I want to learn enough where I can walk through a distressed house and walk out of it with a pretty darn close estimate of costs to bring the house into either rent ready or sell ready.

I see you have done a couple of rehabs... would love to see the action at the site and how you work through the numbers on your future projects. I can offer help in any way I can.

I completely agree on the podcasts... I'm hitting them hard next :-)

I'll see you around the forum. I couldn't make the NTAREI yesterday but will try the next one.

All the best... Immanuel