All Forum Posts by: Joshua Davis

Taking off my investor shoes, and putting back on my retail buyer shoes...

My wife and I spent 18months looking for a new home, which we finally purchased last July.

And I have to say... 18months of looking at MLS pictures, most of which suck, is exhausting.

The bottom line was, if the pics didn't impress us, we didn't waste our time going to the home.

I am a believer.... PRO pics will sell more homes, quicker.

Josh

Please advise,
Josh

Kelvin's last post on this site was "Posted: Fri Jun 22, 2007 10:00 pm". I think Kelvin is gone........

Josh

John,
Please explain NNN. I'm just now trying to learn commercial, and have seen this several times, but am not real clear on what it means.

Thanks,
Josh

Jon,
Can you explain a 75%/20%/5%.
I'm assuming the 5% is the buyer's down.

On a side note....where does the screen name "Wheatie" come from. I work for Kellogg's so I'd recommend something different. Maybe switch to "Grrreat!!"

Josh

Cap Rate is a measure of the ratio between the cash flow produced by a property and its capital cost (the original price paid to own the asset) or alternatively its current market value.

The rate is calculated in a simple fashion as follows:

annual cash flow / cost (or value) = Cap Rate
For example, if a building is purchased for $1,000,000 and it produces $100,000 in positive net cash flow during one year, then:

$100,000 / $1,000,000 = 0.10 or 10%
The properties Cap Rate is ten percent.

NOTE: Positive net cash flow = The amount left over after all fixed costs and variable costs are subtracted from gross lease income, however before debt service is subtracted.

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It is important in the fact that it allows you to look at each property in a simialr fashion. However you must be certain that the Net Operating Income is calculated accurately.

What the cap rate represents is merely the projected return for one year if the property were bought with all cash. Not many buy property for all cash, so you have to break the deal down, usually by trial and error, to find the cash on cash return on the actual investment using leverage (debt service).

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A good cap rate can be determined by your market cap rate, as well as your personal preferences on risk allowance vs return.

Josh

This was all based on buying. When he represents me as a buyer, the seller is paying the commission, hence it doesn't cost me.

Now when he represent me as a seller, he does it for 3-4.5% depending on the deal.

When selling, I create the sales brochure.... I enjoy the creative aspect.

Even more important I have a professional photographer take all of the photos. Cost to me... $50 per property. I firmly believe that photo's are what get the average home buyer into a property.

Since I take care of these two marketing elements, my agent takes care of everything else.

Josh

I personally see advantages to using your own agent and not using your own agent.

In regards to NOT using your own agent. The assumption is that you are going straight to the selling agent to place an offer. The one advantage you may have is in the case of the agent getting dual commission. When an agent is representing both he seller and the buyer they often will get dual agent commission, or in other words the entire 6%. When this is the case they will often push your offer to the seller over other offers. In many cases this can provide you with more negotiating power.

My preference is to use my own agent. We have developed a relationship for which he understands that "What I Want" really is "What I Want". In other words he isn't selling me anything. What he does do is make all of the calls, set up all the showings, and connect the link from lender to closing company…..basically keep everything moving.

I make the decisions, he does everything else. This saves huge amounts of time.....more time to search, analyze and fund more deals.

Different strategies work for different people.

Josh

I'm in the Lancaster, PA area and would certainly be up for some coffee or another type of meet-n-greet.

Josh

First determine what YOU are willing to pay (MAX).
Second go ahead and put in a reduced offer (10%-15% < MAX).
If they counter the offer you've left room.
If they do not counter wait 15days and put another offer in for slighlty more, but not more than your max.

If they don't take your offers, then no loss to you. It just means the deal won't work.

If you always wonder what they'll take and never place an offer....you'll never know.

And remember, it really has less to do with how much they'll take, it has more to do with how much your willing to pay to make the deal work for YOU.

Put in an offer.

Josh