All Forum Posts by: Andrew Syrios

Short sales almost always take a long time, just wait for your agent to return.

Cap rates are definitely based on assumptions, so I rarely use them with houses or with seller pro formas. But with apartments, when you have real numbers, they are very helpful. They are also good when working out your own pro formas or estimates for how an apartment will perform.

With apartments, the primary method of valuation is cap rate ((net income - operating expenses)/Price). The better the area, the lower the expected cap rate. Comparables are also helpful to look at, but you're mainly looking for what cap rate they sold at. You can find comps for such things on Loopnet and Costar as well as through brokers.

And remember two things, your anticipated repairs should be counted in the "price" when you run your cap rate and always use real numbers (i.e. the operating statement) no the pro forma to find the cap rate.

This is definitely more of a police issue, but you also definitely want someone like that out of your building. In some states, you can get a highly expedited eviction if the tenant does something extreme (like threatening other tenants with a weapon), but I wouldn't be able to help you with the details. I would highly recommend you contact your attorney and ask for their advice.

Foreclosures are a good way to go, I usually focus on REO's versus the auctions, but I do know people who have had success at the auctions. Just be careful because tax liens aren't wiped out in the auctions and it's hard to get inside the properties beforehand.

As far as flipping vs buy and hold. I think buy and hold is a better way to go in the long run because it allows you to build long term wealth, whereas with flipping, once the deal is done, it's done. That being said, it's hard to do buy and hold without any capital, and flipping is a great way to raise capital. So it really depends on where you're at.

And of course, a mix of flipping some and holding others is a great way to approach the business as well.

It's very important to screen diligently with Section 8, just as with market tenants. Yes, it may be "guaranteed rent" but if you get bad Section 8 tenants, they will destroy your unit and bring over all sorts of trouble makers to loiter at your property. This is especially problematic with apartments. That being said, there are good Section 8 tenants and bad ones, just like there are good market tenants and bad ones. Section 8 is a tool you should have, in some neighborhoods, it's about the only way to get a property rented and consistently receive the rent. Just be careful with it.

@Logan Freeman

I agree with Engelo, that part of Independence is OK, but I've seen properties that offer a better bang for your buck around there. If you're purchase price is $95,000 and the comps are $96,000, I would definitely keep looking, even if the cash flow appears good. In Kansas City, the cash flow is usually pretty good regardless, but you want to have some built in equity up front.

We often closing with financing on our cash deals (it's easier than refinancing after the fact) and do it by closing with our own title company. It's a little redundant, so there are more fees, and you can't get out of the contract because your financing fell through without losing your earnest money, but you can certainly do it that way.

That's a very good idea Scott, and you can take advantage of FHA financing (like 97% LTV, 4.25% or something ridiculous like that) as long as it's four units or less and you meet their requirements.

It sounds like you very well have enough damage for an insurance claim. It may be worth hiring an adjuster yourself (they can often help you get a better claim). Your tenant sounds like he is liable, but it's unlikely he will have enough money to pay, so the insurance angle is probably best, although I would suspect you can still go after the tenant say for the deductible (probably should check with your attorney on that first).