All Forum Posts by: Ralph Romero Jr.

@Francois sure all cash is beneficial when I am doing a 1031x to save about $25,000+ in capital gains tax!

When I find a property I am interested in I write a letter nothing special just I am an investor looking to buy their property and I put my offer in writing in the letter.  Of course I put somewhere that this offer is subject to my inspection or the property and any leases outstanding.  Last 2 deals done this way the leases were way under market so after purchasing the property I sent new leases to tenants with comps showing current market rates.  Was able to buy the properties at 25-30% below market bc no agents involved and leases were low.  Instant equity and cash flow!

I have been in both situations asked and been asked in all cases I had no problem disclosing it I even included it when I returned the signed contract because I anticipated they would ask....they were very appreciative.  I'm assuming your looking at a multi-tenant commercial building???  In either case if they didn't want to disclose the tax return then I would ask them for something else to back up their numbers i.e. rent roll, copy of all leases/expenses etc.

Now that you have seen the property make sure you determine your strategy/goal with it and stick to it....are you going to try to flip it or rehab to rent.  Sounds like you are talking about a serious project or at least bigger than what you had expected once you start talking "full gut job" that's when the "surprises" come out and your budget gets crushed.

@Katharine I wouldn't trust the zestimate personally. Ask agents to run you comps on MLS of similar homes in the area and go from there. Remember you always make the money when you buy not when you sell. Good luck keep us posted!

Market...great deals are hard to find. Of course I got in during the financial crisis (boy those were the good day$$$$) now too many "investors" casing deals driving up prices. Closing my next deal...1st one for 2020.....next week.

Ramsey has sound advice for those trying to get out of bad debt...i.e. cc, student loans, medical etx. but as an investor it doesn't make sense.

Example: $200,000 property and for discussion purpose 1% rule so monthly rent is $2000 month. All expenses will be the same i.e. taxes, ins. repairs etc. If you get a mortgage or not therefore lets estimate at $9,300 for the sake of a post.

So all cash purchase $2,000/mnth. annualized is $24,000 a yr. - $9300 expenses = $14,700/$200,000 purchase price = 7.3% ROI

Mortgage assuming 20% down ($40,000) your note @20 yrs. & 4.75% (I just got that yesterday on my next deal) your payment is $1,034/month or annualized $12,408. $24,000 rent income - $12408 payments = $11,592 - $9300 = $2,292/$40,000 = 5.7%

7.3% cash > 5.7% in this example HOWEVER...with the mortgaged property I only spent $40,000 therefore $200,000 cash in hand - $40,000 = $160,000 left to do another deal and another deal. Additionally, I amortized it on 20 yr. (my preference) I have recieved 30yrs notes as well which would lower my mortgage cost and increase my NOI and Rate of Return.

the BIG caveat here is appreciation, the other factor in investing in R.E. All cash property you have 1 property assume a 10% in say 5 yrs. now worth $220,000 vs. mortgaged properties (estimate 4) same 10% equals $880,000...no brainer