All Forum Posts by: Justin Sadauskas

I'm not paying $441,000 - thats what I was hoping it would theoretically be worth.  

My purchase price would be around $230,000.

Thank you for all the responses!

At one threshhold of units would you say that cap-rate becomes the primary factor in determining value?  

I get that I should have a vacancy rate, operating expense when I am calculating these numbers for my own purposes - my questions has to do with estimating value.  

I want to be able to exit the property if I need to and since I focus on exclusively residential properties, I'm having a hard time determining what the property will be worth after I'm finished.  I will probably keep it, but if I'm not creating value after putting in 100k worth of work, what's the point?  

My questions is this:  when an experienced investor is saying he is looking for a 10% cap rate is X area, is he is talking about a true cap rate, with vacancy, and operating expense estimates etc?

I see so many listings where it's the agent doing some quick math and saying CAP RATE 20%!! and it's nothing close to what I would call a cap-rate - it's so common I was wondering if that there was some other definition used to ballpark prices.

What is a fair number used to estimate operating expenses? 

Hey guys - can you help me analyze this deal through?  

I am considering purchasing a 4-unit multi-family for $230,000.  I would put $100,000 into the property.  This would include completely remodeling all four units, new kitchens, bathrooms, decks, roof, siding, furnaces, hot water heaters, windows, landscaping and a new parking lot in front of the building.  The area is very good with very expensive subdivisions all around.  

PP - $230,000

Renovations - $100,000

Total rent once renovated - $1100 per unit = $4,400/mo

Taxes = $4,700

Insurance = $4,000

Is this a good deal? Secondly, I am a little confused when people talk about cap rate? When people talk about selling at a 10% cap rate are they including operating expenses into their NOI figure? It seems to me they just take gross rent and subtract taxes and insurance and any other fixed costs. Would it be fair to assume that if multi-families are selling at a 10% cap rate that $4400x12 = 52,800 - 4700 -4000 = 44,100. At a 10% cap rate, purchase price would be $441,000? Does that make any sense to anyone?

All thoughts appreciated.  

Hi guys,

I have been using Quickbooks and classifying all our flips as building or original cost and on Brandon Halls' most recent podcast he mentioned using the inventory function.  Does anyone have any experience with these functions or recommendations on how to use them? 

Yes.  You have all the right ideas.  Cash 4 keys, land contracts, rentals - I have done it all before with success.  

Make sure you are not trying to collect upon the debt of the mortgage and you trading cash for possession or working out other arrangements with them.  

Hello.  I am considering purchasing a property in Illinois, currently I do most of my investing in Michigan.  Is Illinois a redemption state?  If so, how many months after the sheriff sale before it expires? 

In Michigan, most evictions take roughly 30-45 days.  Is that about the same for Illinois?  

Any other information or ideas would be greatly appreciated.  

One negative I see is that the buyer would pick up all the liabilities associated with the LLC , so they would have to do due diligence on that. Also, lawyers would need to facilitate the transaction which might scare away some less savvy buyers. My hunch is that you could offer it, but it doesn't sweeten the deal much.

My only advice is that we've all had bad deals.  It's sounds like you can afford the loss (although it's never fun) and the experience gained could prove very valuable if you stay persistent.  Good luck .

I have a tenant who is late one month and paid $950 last month.  The management company took $150 in late fees and paid me $800.  Is the management company allowed to start collecting late fees before the balance is at zero?  It seems that they should be the waiting to collect their late fees - not me on my rent.  All advice appreciated.

Thanks in advance.