All Forum Posts by: Tyler Weaver

Looks nice!  Matching black oven hood can be had at HD for $50.

Curious, how much did this upgrade cost?

I am assuming you are looking at a smaller income property as Giovanni mentioned 'plexes'. In these cases it is very difficult to normalize current condition. If a quad has one 10'year old boiler, how long is it going to last? If an apartment building has 100 hot water heaters that are 6 years old you can start predicting with more surety. On smaller properties it's more of a guess when major repairs will come up.

NPV is mostly useful for determining whether spend with a delayed sale makes sense. So let's say building an office building, then takes 2 years of holding below cost before the space is absorbed completely, then sold off to another company in 5 years.

The biggerpockets 50% rule and 2% rule are more useful for comparing different properties. Usually I will take these rules and start to normalize them for the conditions of the specific deal. It's not as fancy as IRR or NPV but the way those calculations leverage the base assumptions means if your off on a factor it can swing the valuation way off.

I would imagine 5k is not going to cover renovations. Could be wrong but esp for first time renovation it's going to be difficult to pick where to spend the money.

Return on capital being. If you put 10k cash into property and made 1k a year you would be at 10% roc.

Sounds like your on the right track though!

One problem with 'nicer' neighborhoods/properties ESP NYC is that your competing with investors with different motivations bidding up the price.

You have investors with money just looking for capital preservation and growth, they might not ever NEED any cash in their entire lifetime so they can buy in solid NYC neighborhoods knowing that in a long term span the price will at some point go up. You are also competing with investors who are of the mentality that if they cash flow even or at a small loss all is ok because NYC real estate will certainly appreciate.

I purchased a similar rent free property around 2006. (Market timing fail...). While the property made for a great place to live and a good rent free environment it was not necessarily the one I would have purchased solely on investment merits. That being said it basically cash on cashes 100% because I got an FHA mortgage with like 3% down.

So if your going to do this here is my recommendation. Evaluate each property as if you were no longer going to live there. Factor in property management etc. If you can make satisfactory returns as a rental, then being your own customer is an acceptable move. Given you are living there, you will have more options on lower down payments etc that may cure some of the downfalls (lower returns of a house that's "nice") of buying a home as an investment.

Now if you have enough to cover the down payment on a 500k property, you could move out of the city to somewhere where you can get a property at a 10%+ cap rate. Self manage and make a whole living, or more realistically a basis of a living, out of it as opposed to living rent free. There are many interesting cities in Americas flyover states where this is possible.

I think one thing that was implied, but not mentioned to the OP was that NOI does not include mortgage expenses.

That being said, I typically use pro forma estimates over the period of my horizon (say 10 years) and then divide it to a monthly budget. That way if I can expect to have to put a new roof on in 7 years, I can budget it over the entire timeframe. Of course, at the same time, I do another calculation to place all my expected cash expenditures and make sure there are no deficiencies. (an allowance over a 10 year period isnt going to cut it when you need a roof in 3 months)

I just got a house that I plan on living in and renting out the other rooms. Does anyone know how a lease would work since it is not a multi-family property?

I am from cincinnati ohio. About as far away as you can get within ohio, huh?

What do you guys think about the real estate market in cincinnati for the long term?

I am looking into buying a rental property and I was wondering about property management companies. I do not need a property management company for the short term, but I might be moving out of the area within 5 years and would like to be able to pass that job off to some company. What are your experiances with owning property outside of your area and dealing with property managers? Also about what do they cost? I am in Cincinnati Ohio.

In Cincinnati it could buy you a multi-family with 4 2 bedrooms or equivilant size. Then if you are looking for a house it will get you some old building that has been re-habed on a hill with a view of downtown..

Pretty cheap real estate markets in comparison...

I am just getting into real estate in Ohio. Going to be buying an investment property that I will use as an owner occupied while I go to school then rent it out afterwards.

My plans are to either get a multi-family property and rent out the extras or get a 4 bedroom house and rent out the other 3 rooms to people I know.