All Forum Posts by: Michael L.
Michael L. has started 6 posts and replied 53 times.
Post: Could someone critique my yield forecast?
- Investor
- Lancaster, PA
- Posts 53
- Votes 60
As above, the price-to-rent ratio is very low in markets like CA and NYC.
The concept you are looking at is Cap rate, which basically describes what your potential yield would be on an investment if you paid all cash. Lower risk investments in stable markets tend to have lower cap rates, whereas higher risk areas have higher cap rates commensurate with the risk.
The other problem you are seeing is that many SFH are valued based on what people are willing to pay for them (comps model) as opposed to how much rent they can bring in (cap rate model). Commercial property is completely valued on cap rate.
Post: Would you ask a lender to match a different lender's rate?
- Investor
- Lancaster, PA
- Posts 53
- Votes 60
Originally posted by @Bryan N.:
I mainly use one lender, because she makes my life easier and the fees are not crazy. One text and a pre-approval letter is in the email. I do the entire loan process through email. But, whenever I apply for a new loan I check my backup lender for interest rate. Then I'll ask my primary lender to match. She knows I'm going to do this, so I usually don't need to do it.
I follow this exact same procedure. I may pay slightly more, but get amazing customer service (which saves me tons of time). Having had very bad experiences, I believe this is important.
And, she always seems to be able to match lower quotes :)
Post: Condos Buy and Hold : Why the resentment?
- Investor
- Lancaster, PA
- Posts 53
- Votes 60
I recently bought a condo Townhouse investment and am very happy with it, but as others have pointed out - it's all about the numbers!
I was comparing two very similar townhomes at the time, but one had an HOA and the other did not. I purchased the one with an HOA because the numbers were better. The fee is $160 per month, but that includes water/sewer/trash (about $90/month savings), exterior insurance ($30/month savings), and the taxes on the condo were about $50/month less than the other townhouse.
So in the end, the monthly costs for Taxes/insurance/HOA were the same between the two houses (even though only one had an HOA). With the HOA, I also get snow/mow and exterior maintenance for "free."
It also helps that my mentor invests in the same condo community and was able to give me some investor insight before purchasing. One of the things he pointed out was that the management company changed recently and things have improved, including FHA mortgage approval, so home values are expected to rise in the community (which would be a nice bonus if it happens).
Just my two cents - it always comes down to the numbers.