All Forum Posts by: John Timmerman

 Are you familiar with the Syracuse market? Or the area of these properties?

People keep saying you don't know what your doing in an effort to help protect you from a setup for failure. They should be following up with clarification (and i believe are not out of assumption that it's just known common sense in this field) that as you don't know what your doing, you NEED and should be HIRING your weakness, hiring someone who DOES know what they are doing. An REI Acquisition Consultant to advise you, to analyze the deal.

It does not seem like your open to the advice and direction in an open honest manner, just seeking affirmations of what pre-decided to hear. I get that sense. 

I'm with - you're not ready to be buying these properties. Unless you're an eccentric billionaire. I think there have been several responses so far on this thread that question all your numbers. 400-800k range and wanting to "just pick a number". You need to hit the breaks. Hard.

I think others have already commented on some of the items, but one thing I noticed - you keep calling these cash flowing properties. They MAY be cash flowing for the current owner (who doesn't have financing cost that you will have) but that doesn't mean they'll cash flow for you.

You're here for BP advice - here it is: Know your numbers. If you were on Shark Tank, they would kick you out. Advice and help isn't always going to make you feel good. Reality hits hard.

This may end up being a nice opportunity but based on the information on in your posts you have no idea if it is or not. And for that reason - I'm out.

@John Timmerman

Also… cushman calculates net bases on operating cost and rent, they don’t build debt service in. So it’s technically net but, it’s NOT cash flow.

I prefer to calculate with debt service so I know if I’m cash flow positive or negative, that’s another key point if you are just starting to analyze properties.

@John Timmerman fair is relative to the market you are in and the asset condition of each property.

No one can answer your question unless they know your market and have seen each asset. If your agent is an investor focused agent he should have a formula for how he is coming up with the valuation. You should ask him for it instead of throwing numbers at the wall.

From my experience off market deals are usually priced through the roof because someone says “sure I will sell off market if I get this high price”

To give you an example to reverse engineer. I am in the Buffalo market. We get around 8% cash on cash returns for B class properties in good shape.

So I would take the cash on cash returns for Syracuse and run the equation backwards to get a sale price. Then I would subtract all or a portion of major CapEx expenses.

CapEx and maintenance are your two most variable cost. On a portfolio this big if you don't know how to predict those two line items you could

Have a nightmare on your hands instead of an asset.

I am baffled @John Timmerman, you clearly do not know how to evaluate these properties (and have been honest to such), so I am confused how you believe the outcome of acquiring a business that you don't know enough about to even be able to evaluate it will result in anything but a flaming dumpster-fire? 

And as an owner of other business's as regular profession...... I am just baffled this base-line requirement of comprehension in a business acquisition didn't immediately hit you as common sense. 

There is layers to this onion, MANY layers. For example, are you aware that commercial financing is considerably different than standard residential? That the appraisals are considerably different? How about maintenance, where does that stand, is there any deferred maintenance? Or zoning, is there any impending changes in that directions of things? What is management impact like? There is so many factors that go into assessment and underwriting that it looks like your running into this totally blind and that all but assures disaster. 

If you don't know, HIRE someone who does, that's basic law of business and life 101, right. 

the question is why wouldn't you just go buy 8 properties at 400k and rent them out. this is very confusing post

@John Timmerman Assessed value is simply the amount you pay property taxes on.

"Assessed Value" is notorious for being way off. It can be very low or really high or it can be about right. There is not enough consistency to use it for any purpose other than to know what current property taxes are.

Theoretically assessed value is supposed to be Market value, but it rarely is. 

@John Timmerman I am a little surprised that you are casually mixing two property types that have different valuation approaches. 

The 5 unit is commercial residential that is normally valued based on rent roll. The single and the duplex are valued based on comparative analysis. You should be easily able to find out what similar properties in the same address locations have sold for in the last few months, just like an appraiser would. For the 5 unit, you should be able to get the rent role and do a market rent comparison to determine the valuation.

Stating one lump sum appears strange to me. Did you really complete your due diligence on these properties?

How did you come up with a market value of $400k?  Do you have the addresses of these properties?