All Forum Posts by: Seth Borman

I called my brother, who lived there, for clarification. He was paying under $100. After he left we got a tenant that used a lot more and those bills could get pretty high.

We paid a lot more for trash/water/sewer. I want to say over $200/mo.

Why don't you share the neighborhood with us?

I'm using cap rate and yield interchangeably.

Brett has a good explanation.

The coolest thing about cap rates are that you can work the equations both ways. NOI or the cap rate can change, either of which will effect valuation

@Immanuel Sibero yes. Investors want to achieve a certain yield. If I can get 14% in treasury bonds like 1980 then I'm going to want much more than that for a risky Class C apartment building in South Dallas, right?

So NOI doesn't change but the expect yield does, which means value falls.

The cap rate can also be called the yield. Different investors choose different deals for different reasons. The less risk and work something is the lower the cap rate. A pension fund would rather have 5% return on a Class A office building with a credit tenant than risk money trying to hit 10% on Class C apartments. Over time, cap rates change. When interest rates are low money flows to real estate as people seek yield. That makes buildings more expensive. When interest rates rise the yield rises and building values fall.

Having done this before, it's usually better to sell unless you bought it with renting it out in mind.

For the purposes of valuation and obtaining financing it is residential.

The advice above about system sizing is completely wrong. You need to have a technician perform an actual calculation to make sure that the system is the right size. The last time I replaced a furnace it was a unit that was 50% thermally efficient. We went up to 96% and reduced the sizing from 150,000 BTUs to 80,000 BTUs.

I'm interested.