All Forum Posts by: Mark H. Porter

I would suggest you stay out of Burlington due to the constant push to regulate STR's due to the housing shortage.

Hmmmm….this is not correct.  It’s not 6% directly, it’s the 6% value times a millage rate.

For instance, my rental, valued at $204k, had a tax bill of $2200 per year.

@Joseph Chacko vellukunnel Joe, ask for an invoice and receipt for the tank removal.  The invoice must show exactly what they did for work.

Also, check with the state to see if there are and rebates for hazardous waste removal.

@Jim K. Jim, I can only tell you how I’ve handled it for 24 years.  The ceiling and wood underneath it needs to dry completely else you could run into issues with mold.

I’ve had houses built in 1863 and the turn of the century that had plaster over lathe ceilings that leaked.  I had to stack Sheetrock to get the depth but you could hardly notice the difference with the right feathering skill.

You’re call, you asked for advice from people that had been through this.

Seriously, don’t sweat this.  Fix the leak and clean up.  Ceiling has to stay open to dry for about a week.  We’ve all been through this with water heaters, p-traps knocked lose by tenants, roof shingles breaking.

1. Plumber to fix the leak ~$100

2. Ceiling repair (cut wet rock out, replace, mud, tape, paint) - ~$500

@Donald Howaniec I did a DST this year with left over money from a 1031 STNL. Research this carefully, set your goals beforehand.

For instance, I needed to cover a debt service from my relinquished property, I wanted a DST with an experienced sponsor with a good reputation, and I wanted a 6% return.

The return I was demanding eliminated much of what was out there.

It was VERY easy to eliminate the many DST brokers out there. If theyre just going to send you a portfolio booklet or send you to a website of all their listings tell them to pound sand.

You need to separate cap rate from any discussion regarding interest rate. Debt service is not part if NOI and it cannot be added haphazardly to the equation.

Would you raise or lower your price based on what a borrower gets for a rate?  Obviously not.  Some borrowers get 3%, others get 5%.   it has nothing to do with what you charge for a property.

What WILL happen is a reduction in the pool of buyers, but that’s ok.  You’ll be called by more professional buyers who understand the commercial market.

@Peter Goran Pete, I wouldn’t use the cap rate the way you are.  I use the cap rate simply to decide whether to even pursue a property further.

It’s one of my cut lines for qualifying properties.  For instance, my last NN STNL purchase started with me investigating properties of a certain asset class with a 6% cap.  Once there, I could subtract the debt service and capital improvement set-aside (note this was a NN) to determine my net cash flow.  

I’m not a big player in this game but earned, part-time, an early retirement with the ability to do pretty much anything I want.  Pay attention to net cash flow.

@Joe Splitrock, you’re correct, I didn’t consider that explanation.

@Dennis L. - it's really quite common for people to use terms incorrectly (I know i have!). One notorious one is in the calculation of Net Operating Income (operating income minus operating expenses). Note that set-asides for capital expenses and your debt service are not part of operating expenses . Therefore, they are subtracted from the NOI, not before it. I've seen a number of accusations be tossed between seller/buyer when their not talking the same language.

Completely agree with @Benjamin Magnie.

I’m Not sure how you valued the present value of your assets without increased rents.  Most buyers will be looking at the Net Income as part of the valuation decision.  With low income you Will have depressed valuations.