All Forum Posts by: Jeremy Cyrier

Integra Realty Resources has a great market guide called Viewpoint that's free to download and will give you market cap rate information.

Awesome persistence in searching for deals and for knowing how to correctly calculate the cap rate.

There's no perfect solution. I like IRR.com's Viewpoint guide to get a sense of what's going on a market. http://thecaprate.com/ has a pretty cool online tool as well.

You would probably want to sell the building, but would need to figure selling it at an 11 cap or higher if that were the case. While I don't expect interest rates to rise that dramatically in that short a time period, it is important to plan for a higher interest rate environment in 5 years. Make sure your rents are set, operating expenses are lean, and be ready to pay more money in interest for your loan that you do today.

Before you go tactical on marketing the space, make sure you know who your customer is i.e. the best tenant profile for the space. Typically, there will be several tenant types you'd identify and then build your messaging to them. That's when you're good to go on marketing using the good lists above.

It seems to make sense to sell it. If you can convert $600,000 from earning you $10,000 per year to a 10% dividend of $60,000 per year, that's quite a pay raise. To own a piece of real estate worth owning, you'll need to put down about 50% of the equity and use some leverage to get the return without the headaches.

I love Craig Hall's "Timing the Real Estate Market."

When you don't have any comps, the best approach is to either value the property using the replacement cost method, which means you'd figure out how much it would cost to build the same building today. Or, use the discounted cash flow approach, which would take the sum of all future cash flows, plus your sale price, and discount those dollars back to a present value to determine a reliable valuation.

I wouldn't suggest going a step further until you run demographics, income and crime data on the location and its surrounding area.

Is the property 100% leased and producing $75,000 per year? And if so, what type of vacancy and credit loss factor are you considering? And is there other income coming in from laundry facilities, etc?

After you've figured your effective rental income, calculate your annual operating expenses. Don't forget to budget for repairs/maintenance, unit turnover costs (about 40% of your units may turn annually), legal and accounting fees, a higher real estate tax bill if you're paying higher than the assessed value, and landscaping.