All Forum Posts by: Robert Leonard

@Christine Magee if you were a licensed realtor in the past, why don't you renew your license? You know what the code of ethics are and the rules about real assistants. It's a little odd to me to see someone who was licensed 3 years ago asking for licensed agents or brokers to "give" them access to the MLS?

Not knowing anything about the condition of the properties, here's the quick desktop analysis:

2750/mo * 50% (rule of thumb, estimated operating expenses) leaves an estimated NOI of 1375/mo.

After you make your 50k DP, you have a loan of 200k @ 5% that gives you a monthly payment (debt service) of 1320/mo which leaves you a whopping estimated pretax income of $55/mo. Banks generally use a 1.25% debt coverage ratio for qualification based on NOI and this is only 1.04% debt coverage ratio and not a qualifying debt coverage ratio.

I think your $50k can do better than that in another investment that you haven't found yet.

NOTE: This is only a quick desktop analysis using rules of thumb.  Your due diligence may prove otherwise, but on quick analysis, this appears to be NO DEAL.

This is not an official REIA or club, just a group of RE investors getting together to get to know each other over pizza. We might even talk a little strategy.

6:30PM Monday 2/23/2015 at Tony's Pizza,  335 E Prien Lake Rd, Lake Charles, LA 70601

Please reply here or text me so I'll have a head count and know what size table to get.  They don't take reservations,  so just look for the BP Group.  That's who I'll tell them we are in case anyone comes in and asks.

Come hungry, they will expect everyone to eat.  There won't be anything pitched or for sale unless any of you bring a good wholesale or a rental property that you want to sell!

Hope to see you all there!

http://www.nreinsurance.com/

I have no affiliation with the company. Just a satisfied customer.

All valuation is a matter of estimation.  For that reason alone, allowing a margin for error (safety) is prudent for sound investing.

Some reputable investors follow or espouse that logic:

http://www.investopedia.com/terms/m/marginofsafety.asp

Undervalued does not equate to distressed (or cheap or low priced).  In it's simplest form, it is something available for purchase at a price below what you analyze the actual value to be.  Since I don't have a crystal ball, I like to allow a margin for error/safety.

For me it's simple. If there are "good deals" as you defined them (with a focus on being undervalued) available, why would I pay full price? If I can make the same returns on 2-3 deals that takes others 4-5 deals, I choose 2-3. If there weren't deals available that allowed me to "make my money when I buy" I would buy deals at retail. I get outbid for properties all the time (not by the hundreds of offers), by investors who accept lower margins. Sure they will still make money, but as long as there are properties that I am successfully buying at much more profitable margins, I'll limit my MAO to my criteria until I'm unable to buy anymore, then I'll switch my criteria. Or I just won't buy.

I don't consider it an obsession. I consider it discipline.

That's the kind of local knowledge that helps.  I want to avoid any kind of busy night if possible.  If we go on a slow night, our meetup will be a plus for them.  FYI Tuesday nights are out for me because my son's scout troop meets on Tuesday nights almost every week.

I'll just gather as much feedback as possible over this week and make a decision on when/where to meet this weekend. 

Thanks for your help @DJ Savoy and @Account Closed !

@Bob Green I haven't sold any large portfolios of properties, but I have looked at/analyzed a few to consider for purchase.  I used the basic income approach used for multifamily as my formula for valuation.  The tall order for me was the due diligence necessary to determine the condition of the properties and knowing the locations well enough to know when the income approach to value was skewed by the character of the neighborhoods.

Other buyers I talked with about the process use automated valuation models (AVM) to guage value, but I found those to be way too inaccurate.  I buy and hold, but I always keep the door open for plan B, quick sale if necessary without taking a loss.  That means I always consider each property on it's own - a) will it cashflow positive and b) if I buy it this morning at this price, can I sell it this afternoon without taking a loss?  That's pretty conservative, but it works for me. 

The pools I looked at had too many properties that wouldn't pass both tests to make them worth the effort to complete the due diligence.  I'm only talking about the valuation part of an existing portfolio deal, but the other huge x factor is property management.  I hope that helps in some way.

@Crystal Shi it really is a matter of a few factors.  What type of tree and it's condition and the type of foundation, (concrete slab or on piers?)?  You have to get a tree expert (arborist) to tell you about the health of the tree.  If you had your house inspected, an inspector would probably have found any foundation issues if you had any?

Sorry to only add more questions, but these are a few factors to consider.  I just took out (cut down) a couple of mature trees at a couple properties because of proximity to the house and condition.  It was unfortunate, but necessary. 

I've met several investors in the Lake Charles market here on BP and elsewhere and I want to get to know more of you better. One thing I've learned is that REI like pizza (like just about everybody else ;-). I want to get together with some local REI for pizza and to talk goals and strategies starting this month. I'm looking for your opinions on which of these places would be good on a Monday or Wednesday night (trying to avoid busy nights when the place will be full and loud)?

I'm a big fan of urbanspoon.com. I use it all the time to find great places to eat when I'm on the road. Here are a few highly rated sites.

1. Pint House Pizzeria, 329 Broad St

2. Tony's Pizza, 335 E Prien Lake Rd

3. Rotolo's Pizzeria, 4201 Nelson Rd

Please advise if there's a better place that's not on this list or which you would prefer? I would like to figure this out by Friday, to plan for a meetup on the week of 2/23/2015.