All Forum Posts by: Andrew Syrios

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.

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.

Welcome to BP Dirk!

Isn't is also true that you have to exchange like for like, so in addition, you couldn't exchange from an investment property into a development. Or am I mistaken on that?

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.

Welcome to BiggerPockets Katrina!

Some people call Independence "Methdependence" if that gives you an idea.

No, it's not that bad, but the big thing is it's a rather big suburb and so just saying Independence is too vague to tell. The northwest part near Sugar Creek is pretty rough. When you get all the way east toward Blue Springs, it's actually quite nice. If you're OK with lower end, cash flow rentals, you can do well in Independence. (None of it is really a war zone.) But if you want to be in the nicer spots, you want to be south of 23rd and east of Noland.

For websites, check our CLRSearch.com which can give you all sorts of info on the zip codes and City-Data.com, which has a lot of info too, but also has a map feature that you can look at different subdivision by income, occupancy, etc. (although not crime unfortunately). 

Welcome to BiggerPockets John and good luck investing!

I wouldn't refer to flipping as a safe business. It's certainly a business where you can lose a good amount of money. Hell, on some deals, it's happened to us. If you don't know a lot about estimating rehab costs or valuing houses, I would make sure to partner or at least get advice from someone who does on the property you're looking at when starting out.

For the most part, the students for both Rockhurst and UMKC live west of Troost so it won't be easy to attract students there. But the area is brought up by the university, so if you're looking for inexpensive, cash flow rentals, it's not a bad place to invest (although I wouldn't go east of Paseo).