All Forum Posts by: Leo B.

Awesome thanks for the responses!  Is there an online resource or easy way to determine market cap rates of a specific area?

@Jerry PadillaHe does up to 85% on non owner occupied SFRs from what I know

Thanks @Account Closed Super helpful!

A couple follow up questions:

1. When an appraiser comps cap rates, do they go out a mile radius and similar square footage like in residential appraisals? I would imagine that there could be a single apartment complex in an area with all SFH and few and far recent sales.

2. If the value is based on potential NOI, does that mean the appraiser will have to pull market rental comps as well?

3. How does an appraiser look at costs to rehab a property?  Will a contractor bid have to be included?

This appraisal definitely sounds a lot more complex and rigorous than a typical residential appraisal.

I'm starting to look into performing a 1031 exchange into an apartment complex and am looking for more information on value adds and how a lender obtains their valuation based on the CAP rate. See example below.

- 30 unit complex

- 80% occupancy

- 6% CAP rate based on current income and expenses

- $700K purchase price

- Value add is performed via renovation and increasing rents

- CAP rate is now 8% based on value add

- My assumption is value is higher based on the new CAP ratea dn I want to refinance and pull cash out.

My questions are:

1. How will lender value property after value add?

2. Is there a CAP rate for each specific area? How is this obtained?

3. For lenders, is there seasoning required for new rents to be coming in to be counted in the new CAP rate?

4. Is there a typical seasoning period for refinancing an apartment complex after initial purchase?

I'm in the beginning stages of research on this topic.  Thanks in advance for your replies!

-Leo

Hi @Michelle T.I've looked at a few of your listings. The rehabs all look great. In terms of selling, it all comes down to price. If it's priced right, it will sell. The question is what's the magic number? Every investor has their CAP, ROI, rent ratio, etc requirements. I'd imagine the numbers on these properties are not attractive enough for prospective investors to make a move. Just my 0.02.

@Julie S.Yes

Alain and Shawn mentioned here are also good people to contact.  There are a number of good Indy realtors on BP if you perform a quick search.  They each have their own niche/ areas of expertise.  I would suggest you contact each of them to see if they are a good fit for what you want to do.

Happy Investing!

-Leo

@Jennifer Roberts@Ryan Mullin@Ashley Mullinare my go to folks in Indy

Thanks @Ryan Mullin  I'll give them a ring tomorrow.

Hello-

I'm currently seeking non-conventional or private financing for a cash out refinance on 2 rental properties located in Indianapolis. I own the properties free and clear under an LLC so lender will get 1st position. I'm seeking 20-30 year terms and also open to 2 year balloon payments. Please email terms, rates, and fees. The general information on the properties is below.

2/1 SFH

Fully rehabbed

Purchased 10/2015

Currently rented $600/mo

Approximate value $45K-60K

4/1 SFH

Full rehab to be completed in the next week

Purchased 7/2015

Approximate value $100K-115K

Approximate rent $850/mo

Hello-

I'm currently seeking non-conventional or private financing for a cash out refinance on 2 rental properties located in Indianapolis. I own the properties free and clear under an LLC so lender will get 1st position. I'm seeking 20-30 year terms and also open to 2 year balloon payments. Please email terms, rates, and fees. The general information on the properties is below.

2/1 SFH

Fully rehabbed

Purchased 10/2015

Currently rented $600/mo

Approximate value $45K-60K

4/1 SFH

Full rehab to be completed in the next week

Purchased 7/2015

Approximate value $100K-115K

Approximate rent $850/mo