All Forum Posts by: Vlad Denisov

Hi Sam,

 1. Source: U.S. Bureau of Labor Statistics began tracking the Consumer Price Index for Rent of primary residence in 1984. In addition to rent, the index produces monthly data on changes in prices paid by urban consumers for a variety of goods and services.

2. Then we have to stress test it with a) Total Vacancy (is there a better term for it?) twice as high as now and b) The lowest rent growth rate that we could see during last 40 years. If it still cashflows under both of those conditions in the same time, would that be enough to consider an investment very safe?

Hello everyone, 

1. According to this statistics the average rent inflation rate from 2010 to 2018 is 3.11% per year. During the recession the rate went to:

2.28% in 2009

0.23% in 2010

1.71% in 2011

2.65% in 2012

2.83% in 2013

And it finally came back to average rate in 2014 (3.15%)

So, we have 5 years with rents growth being below average rate, so we would have a loss in comparison with a long-run where we get 3.11%. Average rate for those 5 year was 1.87%. Does it mean that we are pretty safe on a multi-family investment from the point of view of income? It seems if the average rent grow by 40% less than average but it is still a positive number, our NOI is fine to protect us from a lot of issues. Is it the vacancy factor which matters the most that I'm missing?

 Hi Marcus, 

So, if we don't reinvest we are still getting the same IRR, right?

I got the point on CapEx that is not usually taken into account, thanks for insight.

Let's say we acquired property on a year 0 for 100k. Let's say we had a cashflow of 10k every year, for years 1 to 5 and on the year 5 we also sold the property for 130k. The question is why when we calculate the IRR, we do it as if all those cashflows were reinvested into the property? Because in reality when we get 10k in the end of year 1, we are free to do with it whatever we want and oftentimes we won't reinvest it in the property, right? So does it only make sense if we reinvest or I miss something?

Everyone around seems to agree that recession's gonna come within 3 years with a high probability. If it's true, does it mean that it makes all the multifamily deals right now much worse than lets say 5 years ago? I saw a lot of people on BP saying they exiting on all the properties they have right now. Would you say it's a bad time to start this year for a beginner or not? Why?

If the value of a multi-family is based on NOI, and we know that rents in B - , C+ are gonna stay the same during recession, then why would the price of our property fall? What are the reasons behind it I don't see?

 Hi Greg,

What if our plan is to hold it for 3-5 years and sell? Yes, the payments don't go towards principal but the payments are smaller, so I'm assuming our cashflow is getting bigger, right? Instead of having part of the payments going towards principal - we can actually don't put this money there and invest it with a bigger rate of return, because we don't get any return on these money, right? So, my question is, isn't it better to pay a bit more interest for 5 years but have this extra cashflow and reinvest it into property or make another investment?

 Hi Michelle,

Thanks for your feedback! Please keep us updated, I'm very excited to watch you grow under the wing of Peter.

Hello everyone!

Question to people who own 16+units - what type of loan do you use? Do you always go with interest only or not? What is your train of thought behind this?

There are so many oracles out there but is it really possible for one to know for sure such a thing? What is the best probability with which investor can predict crisis in given month? quarter? year?

What are the indicators of crisis coming that we can use 'for sure'? Like interest rates, debt, capital, something else? How to learn how to predict crisis for a person who has no idea how to learn that skill?