All Forum Posts by: Paul Smythe

Market cap rate is primarily a function of market demand. Not the answer I think you were hoping for, but I believe that to be the reality.

More investors in the market = more demand = higher prices (and thus, lower cap rates)

Think of a cap rate like a bell curve. Every market will have investors who are willing to pay less than the market cap and investors who will only buy if it's higher than market, but the average investor in that market is going to pay that cap rate.

Large national brokerages track sales and cap rates from those sales and can be a good source for generally reliable market rates, but the reality is that there is no one source with the exact (agreed upon) cap rate.

It's very similar to residential in that it's not an exact science. Residential relies on comps, which are also subjective. That's the "beauty" of real estate. Lots of companies spend lots of money trying to determine market rates, but it will never be perfect.

$10/week is unfortunate but not crippling in most cases, which was exactly Zillow's intention. Makes perfect sense from their standpoint. They'll make a lot more money and also clean up the inactive listings. Win-win for them, and their service is invaluable to most businesses, so they're not going to lose a lot of customers.

As investors, it is up to us to adapt. Maybe that means spending more time creating waiting lists or more detailed record-keeping of any tenant inquiries. Still use zillow, but make sure you are maximizing the leads it brings you. Also might mean removing the listing before officially signing the lease if you've brought in enough applications. Heck, for some of us it probably means doing it the old fashioned way with for rent signs on the front yard. Those are still very effective and relatively inexpensive.

@Brian Zaug I worry that you are being too much of a nice guy (I do the same thing). Seems to me that it's best if both sides move on, especially if they are late and you plan to do renovations. It's not your responsibility to help them get back on track, and I'd be surprised if they do, especially considering the renovations will bring a higher rent.

Easy for me to say, though. I'm behind a keyboard and don't have anything at stake in this situation. Maybe you are right and they can get caught up. Trust your instincts, but don't overextend for them.

Treat it like a business.

@Jay Hinrichs re: sewer scope due diligence. Major lesson learned for me on that front. I now know way more about plumbing than I ever intended, and would like to not let this happen again.

Re: pipe bursting. I just looked up a "how it works" video on youtube. Seems like a similar solution and alternative to lining. Any reason you think it is better? How does the bursting system handle 90 degree turns in the pipes? Seems to me like it would need to be a straight line pipe only.

As an update, I am going to try to keep snaking the drains for the time being. This is a long-term investment for me, though, so I expect to use the trenchless solution eventually. High cost, but seems worthwhile.

@Kerry Baird Good luck, I've gotten high-end pricing of $140/ft for the lining. I know I can get that down with a few quotes, but hopefully that gives you an idea.

@Robert Goldman Recently it's been multiple times each month. 2-3 of the duplexes are the ones with the issue. I think roots are unlikely, there are a couple trees, but they don't appear to be much of a risk in my opinion. Still new to the area I'm investing in, so I've been trying plumbers. I was foolish and hired Roto-Rooter. They did a good job but charged me $500. I've found others who are in the 100-200 range.

@John Teachout The impression I've gotten is that it's very permanent (to the tune of multiple decades) and can often be stronger than new pipes.

@Max T. Funny you mention that. I've actually just purchased one this month. I've got a maintenance guy who can do it, so I try to go that route whenever possible. Sometimes you just need a camera and an experienced plumber, though.

Looking to get advice from other landlords on a "situation" I've found myself in. I have a portfolio of five duplexes with constant plumbing issues. Some weeks are better than others, but this week alone I've had sewer lines clogged in four different units. There have been feminine products found in the pipes for two of them, but even after removing those the pipes have still been clogged.

One of the plumbers I hired to who used a camera said that the cast iron pipes are old and have scaling and recommended trenchless pipe lining, which (as I understand) is a thin layer on the inside of the pipes that prevent us from having the dig up the pipes and replace them.

I'm wondering if anyone else has come across this technology and has any feedback. It's expensive (5-6k for a duplex), but seems to me to be a much better alternative to replacing the pipes as the duplexes are on a slab and would require jackhammering and other non-fun stuff.

We are going to be sending out notices to tenants to not flush anything outside of toilet paper or pour any grease down the sink. Hopefully that helps, but I still figure the pipes are too old and are going to get worse.

Would love any input.

@Quang N Dinh @Kenny Johnson message me. I might have a good bank for you both.

$350,000

216 Troy St NW, Atlanta, GA 30314

• Hunter Hills area, right next to the Beltline and about a mile south of the recently proposed Westside Park
• Vacant 10-unit multifamily property
• Four 2BR, Six 1BR units
• Property is completely framed out and ready for renovation
• Owner to place a high priority on ability to close quickly!

Call (770) 288-5000 or email [email protected]

Paul Smythe

Real Broker, LLC

GA Licensee #377835

Offering Memorandum link