All Forum Posts by: Scott Trench

@Jay Hinrichs

 Hey we're not seeing that same thing after testing it under your user conditions... Let me know what browser and OS you're using!

If they are co-signing the lease, they will definitely see it. 

So yes - sorry!

Hey everyone!

We are excited to let you know that just moments ago, we launched a new feature that we've been working hard on that we hope will help Real Estate Investors and all of our users to get better acquainted with BiggerPockets and real estate investing in general.

These "Dashboard Boxes" are designed to help you succeed in real estate, networking, or with whatever else BiggerPockets can help you with. 

Our goal is to use these to provide you with a more personalized experience here on the site.  

You can check them out by clicking on the "Home" icon at the top left of BiggerPockets, or by just jumping right to  www.biggerpockets.com/dashboard

These boxes are brand new - we expect to iterate on these many times, and to add dozens of new ones as needed to improve how you use the site. If you have any suggestions, or find any bugs, please let me know!

I hope that this helps you - check them out and let us know what you think!

Each of the dashboard boxes should produce an action when you click on them - for example, if you want to "read the UBG" it should direct you to www.biggerpockets.com/real-estate-investing

That said, we just launched this today, if you see any bugs, please take screenshots and let me know!

Hey @Luis Fernandez

 I actually wrote a post about mentors not too long ago - perhaps this might be of use to you in your search for a mentor. I certainly used these techniques myself, including to work for Josh Dorkin here!

http://www.biggerpockets.com/renewsblog/2015/06/20/ultimate-guide-finding-incredible-mentors/

@Richard Haiber

It's my opinion that you have done a pretty good job thinking through the expenses, operating costs, income projections, and final sales price. I know little about the building and probably can't provide much input on those assumptions.

That said, it's my opinion that you are confusing yourself and making this financial analysis more complicated than it needs to be. Instead, it could be portrayed slightly differently and more simply to your advantage:

You must factor in your own cash outlay into your assumptions for the value created for the purchase of this property. Given the information provided ((5,830,000 purchase price with 25% down pmt), your cash outlay is $1,457,000.

Year Zero Cash Flow: - $1,457,000

Year One Cash Flow: $110,000

Year Two CF: $ 120,000

Year Three CF: $ 131,210

Year Four CF: $ 142,134

Year Five CF: $ $2,453,277

Net Cashflow: $ 1,499,121

The IRR on this set of cash flows is 17%.

You do not need to apply an IRR to discounted cash flows. Now, I'm confused as to where your discount rate came from. When I personally value investments using financial analysis I like to use a Cost of Capital of 10%.

Why? Because the only thing you know for certain about my financial models and guesses into the future is that they are wrong. The only thing the model tells me for sure is that "if everything goes according to my plan, this either will or won't work". In the case of real estate, the plan better be pretty darn good and work by a wide margin, else why bother!

Now, in assuming a discount rate, 10% is an easy number to work with and fairly close to the stock market. If you can’t beat 10% returns, why would you bother investing in real estate? If you beat 10% by a wide margin, then great! You can make the decision you need to from your DCF model. But I digress...

Discounted at 10%, the Present Value of your cash flows is thus (rounded to the nearest dollar):

Year Zero DCF: $1,457,500

Year One DCF: $ 100,000

Year Two DCF: $99,174

Year Three DCF: $98,580

Year Four DCF: $97,079

Year Five DCF: $1,523,292

Net Present Value at 10% Cost of Capital: $460,625

What this analysis tells us is that if your assumptions are correct, you will make somewhere in the ballpark of $450,000 more dollars on this property than if you just dumped your money in the stock market.

Hope this helps!

@Matt R. Thank you very much for these points. Here in Denver, CO, I use a 1% rule of thumb for my investments for exactly the reasons you stated. However, for every few dollars I invest in a top tier area like my own, I also want to invest a dollar or so for some more pure cash flow. I'd just like to do that in an area where the other factors are as likely as possible.

@Anthony Gayden and @Mark Shaffar

 Thanks for pointing those things out about the article. I agree that it is easy to get confused by the title. It perhaps somewhat arrogantly states that "Americans" are leaving the cities in the list. In this case, I believe the article is referring to local, long-term residents, and in that sense, "immigrants" are not included. 

Whether that's PC or not to refer to long-term locals as the "Americans" is another discussion, but it does make the point that immigrants are likely to have lower paying jobs and live "creatively" in units with far more people than your average American. This is probably not a great thing for rents.

For our purposes, we are looking at where locals are moving to. If the people who have been there a long time are leaving, and the void is being replaced with immigrants, that doesn't leave me with confidence in these areas over the short to medium term.

Came across this article today and thought it might make for a good discussion:

These are the Top 20 Cities Americans are Ditching

I think it’s funny that some of the cities that many investors suggest as good places to look for 2% rule properties (like Milwaukee, WI and Memphis, TN) are ranked on this list - this data certainly doesn't bode well for long-term rent growth or appreciation prospects on cash-flow properties! I think that this gives me pause give pause as I was previously looking to invest out of state in the larger cities that merely had the best price to rent ratios.

That said - the article does point out that some of these cities ARE gaining in population, due to things like immigration. But even with that caveat, I look at this and I see that Americans just don't want to live in certain places and are moving out in pretty large numbers. I wouldn't want to put my own money in a place that ranks highly for that metric, unless someone could convince me that some plan is place to change that.

Economic growth and the long-term prospects of my target market are definitely a huge part of my decision making process as I’m looking to pick a market for my first out-of-area real estate investment.

Anybody have any thoughts on how to choose a great market to invest in? 

@Eldar M.

Perhaps this article would be of use to you:

"The Ultimate Guide to Finding Incredible Mentors"

Came across this article the other day showing a landlord that lost thousands of dollars because some squatter occupied his vacant rental property:

http://whotv.com/2015/07/14/landlord-loses-thousands-of-dollars-to-get-squatter-out-of-rental-property/

This is a horrible horrible system where no good people like this squatter can take months to evict resulting in lost rent.

I'm at a loss as to what this landlord could have done better to prevent this. Seems like some folks will just take advantage of you..