All Forum Posts by: Andrew Syrios
Andrew Syrios has started 74 posts and replied 10135 times.
Post: Hindsight is 50-50 for building a team
- Residential Real Estate Investor
- Kansas City, MO
- Posts 10,502
- Votes 5,099
It's hard to say. Do you want your quarterback to be accurate or have a strong arm? All these people are really necessary, other than personal assistant while starting out. If I had to pick I would go with either the agent (since there aren't very many investment minded ones around) or contractor (since there are a lot of bad ones).
Post: Independence, Missouri proposes mandatory rental inspections
- Residential Real Estate Investor
- Kansas City, MO
- Posts 10,502
- Votes 5,099
Does anyone know of any studies on these programs and their effectiveness? I suspect they aren't effective at all, but a study would help a lot more than my suspicions.
Post: Need Help! Agent Asking For POF.
- Residential Real Estate Investor
- Kansas City, MO
- Posts 10,502
- Votes 5,099
Maybe you can look into one of those transcriptional or honey money lenders that can at least offer you a preapproval letter. To be honest, I'm not even 100% sure they offer such things though. Do you know any potential private lenders?
Post: What wholesalers?
- Residential Real Estate Investor
- Kansas City, MO
- Posts 10,502
- Votes 5,099
There are a good number of wholesalers who don't really know what they're doing. It's a business that's really easy to enter after all. But there are good one's. The best place to meet them is, in my opinion, at your local REIA.
Post: Most effective book to analyze apt complexes?
- Residential Real Estate Investor
- Kansas City, MO
- Posts 10,502
- Votes 5,099
Multi-Family Millions by Dave Lindahl is pretty good in that regard. I think his seminars are overpriced (although not useless by any means) but his books are pretty good.
Post: New and excited Investor!
- Residential Real Estate Investor
- Kansas City, MO
- Posts 10,502
- Votes 5,099
Welcome to BiggerPockets Diana and good luck investing!
Post: Should tenant with dog be accepted?
- Residential Real Estate Investor
- Kansas City, MO
- Posts 10,502
- Votes 5,099
I'm a fan of renting to pets in houses and duplexes, and perhaps cats if it's an apartment with no common area (with a limit of one). This especially helps find tenants in suburbia where many people often want to have a house and yard because of their pets.
Just make sure to 1) Charge a non-refundable pet deposit (we charge $250), 2) charge pet rent (we charge $25/month per pet, 3) Limit the number of pets (we set 3 as the maximum) and 4) not allow dangerous breeds of dogs.
It's up to you, but I think the pet deposit and fee make up for any damages and it provides an advantage marketing your rentals.
Post: I'm a new member
- Residential Real Estate Investor
- Kansas City, MO
- Posts 10,502
- Votes 5,099
Welcome to BP Mirelys and good luck investing!
Post: Property comps
- Residential Real Estate Investor
- Kansas City, MO
- Posts 10,502
- Votes 5,099
It's all a little subjective unfortunately, there' just no such thing as an official price for a piece of real estate until it sells. And in one neighborhood, certain amenities might be valued more than others. That's why getting as many comps that are as close as possible to the subject house is key.
Post: Cap rate... I don't understand you.
- Residential Real Estate Investor
- Kansas City, MO
- Posts 10,502
- Votes 5,099
Originally posted by @David Faulkner:
Originally posted by @Andrew Syrios:
Originally posted by @Account Closed:
Originally posted by @Andrew Syrios:
Originally posted by @Account Closed:
Originally posted by @Andrew Syrios:
The idea behind a cap rate is it will show you what percent return the investment will make if it was bought for cash and has no debt on it. So a 10 cap is really a 10% return on an all cash purchase. The reason to do this is because the type of debt structure you have (LTV, interest rate, amortization, etc.) will effect the return, but how good of financing you can get doesn't effect the value of the asset (unless there is seller financing involved).
Thus, a cap rate is a great way to compare one property to another.
1. So you are saying someone will pay MORE for a NOI to get LESS "return"?
2. AND exactly how do you compare properties when you don't have sales prices?
1. If the NOI is higher, that means the return is higher (assuming the debt was held constant). So you would be paying more to get a higher NOI.
2. A cap rate is only calculable with a sales price (or the list price too if you are comparing potential deals). But unlike houses, there often aren't very comparable buildings. You could have a 20 unit apartment, with 5 two beds and 15 one beds and a 30 unit apartment with 20 two beds and 10 one beds. How do you compare based solely on the sales price? The best way is to compare the cap rates. Of course, there's other things to look at as well such as location, year built, size of the units, amenities, etc. The better those things are, typically the lower the cap rate will be and vice versa.
1. NO! NO! NO! The NOI REMAINS the same. What is changing is the cap rate in different markets and that changes the amount paid for the EXACT same NOI. So if you are buying $10,000 NOI at 5% rather than 10% you are saying people are paying MORE for less "return". Please tell me how that works.
2. If the make up of those types of Multi's result in the market purchasing them at different cap rates then they are different asset classes and you cannot compare their market cap rates against each other. That would be like comparing an A class office building with a concrete tilt up warehouse. It doesn't work.
1. I am absolutely not saying that someone will pay more for less return and I have no idea where you're getting that from. I didn't even mention NOI in my first post. All I was saying in my response was the simple point that, assuming the price is fixed, if the NOI goes up, the cap rate goes up. I'm not talking about comparing markets to each other.
2. That's more or less what I was trying to say, but should have clarified it. Of course, you can compare a building built in 1950 to one built in 1960, or one with vinyl windows to one without, but you need to take that into account. I should have noted that you shouldn't be comparing across asset classes though.
I respectfully disagree with 1. The CAP rate is fixed by the current market. Though it can and often does change over time as the market changes, the CAP rate does NOT change with NOI. If the NOI goes up, the CAP rate does NOT go up ... instead, if the NOI goes up the price goes up, and the ratio by which the price goes up is the CAP rate, which is set by the current market in which that property resides.
All I was talking about is the calculation (and I should note, this had nothing to do with my original post). If you hold the price constant and increase the NOI, then there is a higher cap rate in simple mathematical terms. In real life, yes, like you said, if the NOI goes up, the price will go up because the cap rate is relatively fixed by the market at any given time.