All Forum Posts by: William Coet

Trying to determine if this is reckless or sophisticated investing....The idea is that annual percentage increases and the possibility of rates lowering will allow for positive cashflow.

-A property with a 30 year mortgage would be neutral cash flowing, but in a solid location and with strong demand. Current annual income is $101k

-Annual rent increases of 3% are realistic making annual income after 10 years $136k

-If interest rates lower a refinance would lower annual mortgage expense

-an added bonus over time would be appreciation (which will likely not happen within the next few years)

Thank you for any input!

1 Vote

Hello,

Trying to get an idea of the best sources (lenders) for lowest origination fees and lowest APR for fixed rate loans on 6+ unit multifamily.

Thanks!

1 Vote

Hello,
Trying to get a ballpark on what the current best terms and lenders are for 6 unit multi-family.

Lowest origination fees, Lowest APR.

Thanks

0 Votes

900k earning 5% after 10 years is $1,482,308. Not bad for not taking a single phone call or wondering if someone will miss a payment....

1 Vote

Looking for a 30 year mortgage for a multifamily of 5-10 units.

3 Votes

Quote from @V.G Jason:

Quote from @Peter W.:

I am buying single family homes in nice areas currently. I see real estate being a mediocre investment currently with zero to negative cash flow and expected leveraged returns at 9-15% but lots of upside either on the appreciation side (interest rates and inflation remain high appreciation is likely higher than modeled) or the debt side (interest rates and inflation go low which allows me to refinance into lower interest rates). I don’t account this upside for in my modeling which says I should see 9-15% which assumes 3-5% appreciation, 2.5% rent and cost growth. If I am making 10% currently but interest rates drop by 3% in 3 years from now, I would be making 22% then. You might say buy then, but I probably couldn’t buy a deal making 22% at that point. If I buy deals which are mediocre today, I doubt I regret them in 10-20 years if I hold.

You're investing, some people here are trading. They are thinking a couple steps ahead to capture gain, rinse, and repeat. You're thinking far further steps ahead and weathering the volatility to reap likely more a fat-tails esque reward which likely does happen at the turn of the next inflation wave(not this secondary one coming up).

From 08-16 you could do the former, from 17 fwd it's best to the do the latter. From 22 to current, you have to do the latter. Otherwise, you'll regret it.

Plus real estate isn't an intrinsic, nor is any physical asset, ball game. It's a scarcity play, I am a bit amused when I hear people still fight this argument. Right now most metrics show unaffordability not solving itself, but if you stay liquid and it does start to become affordable--you're able to remain a participant which is really how you should invest. Instead most people trading here will be getting absolutely wiped out.

Nice reply. Can you explain this concept in more detail? Thanks!

"Plus real estate isn't an intrinsic, nor is any physical asset, ball game. It's a scarcity play"

0 Votes

I would like to know if the benefits of depreciation are strong enough to make a property like the one listed below make sense. I would also like to know if there is any way that a property like this makes sense if not paying cash. I would love to buy it, but my simple mind can't seem to understand how it could make sense!

Thanks for the informative replies!

100 year old 6 unit. Not recently updated but maintained well. Old windows. No range hoods. Good location, appreciation not guaranteed for the next several years.

895k asking price.

101k gross annual income

Expenses: Insurance: $4,898

Electric: 2,579

Water/Sewer 5,085

Fire Alarm Connection 708

Property Taxes (if/when assessment is adjusted to sale price)-31,951

30 Yr mortgage (20% down at 7.75%) 61,560

Maintenance, Long-Term Capx, vacancy- 9,000 (this is probably a bit low)

Total annual expenses: $115,781

0 Votes

Quote from @Bob Stevens:

Quote from @Bruce Woodruff:

Could be many reasons. One guess would be that with CDs bringing in 5%, a good property will beat that in normal appreciation over a few years....more with forced appreciation.....

I too do NOT understand this post. 5% I do not know anyone that will even get out of bed for 5% a year,,,,,, Keep crushing it brother,

Depreciation does happen and is happening now in many markets

0 Votes

Regarding 1031 Exchange: Lets say someone sells for 600k with a basis of 300k. They may have to pay 60k in cap gains (based on 20% cap gains rate).

BUT, if they put the 600k into a CD at 5% they earn 30k. Sure there are taxes on that each year, but no management issues, etc..

Even a 1031 doesn't make sense sometimes.

2 Votes

I don't have the cash, but other buyers do. I still would like to understand why they are paying the prices they are when they could put the cash in a CD and earn interest worry (and work) free.

I'm referring to multifamily properties that have no room for rent increases through value add. They are "priced to perfection" and the numbers don't even come close to penciling out if someone has to get a 30 year mortgage. For example: 975k for an old (100 years) place with 100k income and 27k property taxes and owner paying $8,200 in annual utilities plus insurance and maintenance costs. But they sell!!!

Why are people willing to pay these prices when they could put it in a CD?

Thanks!

8 Votes

All Forum Posts by: William Coet

William Coet has started 207 posts and replied 570 times.

Post: Is This Irresponsible or Sophisticated?

Post: What are the Best Current Rates/Lenders for 6+unit Multifamily?

Post: Current Rates for 6 Unit Multifamily

Post: Multifamily Prices so High that Only Cash Makes Sense, But Why Not Put Cash in CDs?

Post: Where to find 30 year mortgage for 5+ unit multifamily?

Post: Multifamily Prices so High that Only Cash Makes Sense, But Why Not Put Cash in CDs?

Post: Multifamily Prices so High that Only Cash Makes Sense, But Why Not Put Cash in CDs?

Post: Multifamily Prices so High that Only Cash Makes Sense, But Why Not Put Cash in CDs?

Post: Multifamily Prices so High that Only Cash Makes Sense, But Why Not Put Cash in CDs?

Post: Multifamily Prices so High that Only Cash Makes Sense, But Why Not Put Cash in CDs?