All Forum Posts by: Syed H.

When it comes to investment property (3+ units & commercial) Cap rates don't matter. You don't make your money on cap rates. You make your money on rental rate appreciation.

It doesn't matter if cap rates are historic lows right now. The right questions to ask is does the area have room for rental growth? This is why appreciation has been higher in submarkets of NYC that have high rental growth (think Williamsburg) than markets than have had regular rental growth.

Also a lot of the published data you see is wrong. Institutional investments sell based on IRR, not cap rate. Many/most deals are value add. In-place cap rates aren't a viable comparison metric unless you are comparing finished product.

1 Vote

Originally posted by @Storm S.:

@Anthony Dooley I wanted to get into brokering skyscrapers like the Morgan Stanley building in Oxnard, CA I got ahold of the owner but they aren’t interested in selling.

Who do you work for?

Commercial Investment sales is a whole different world. It is very different from being a regular realtor.It's not just calling them up and building relationships.

Being with the right company does matter. Certain owners will never hire you because they can't. They need a brand name to give to their board. You will be dealing with massive companies, institutional investors, and extremely wealthy families. The middle market $5-$50m has mom & pops as well, but they get hounded every day on the phone.

0 Votes

Originally posted by @Storm S.:

I’m trying to do a billion dollars in volume in the next 10 years. I found an agent in LA who did a billion dollar deal in a single transaction double ended it. I can only imagine what his commission was.

it wasn't that much. Usually, we got capped on transaction after a certain amount (highest would be a few million usually).

0 Votes

Originally posted by @Greg M.:

Originally posted by @Syed H.:

They’re students. Moving is easy. If the similar sized units rented for $1250, I wouldn’t hesitate to lower the rent. $150/month is a decent amount of money.

Calling their bluff can cost the OP $1400-$2800. Not worth the risk. How long will it take him to earn that money back?

Turnover/vacancy management is what makes the difference between a good operator and a bad operator.

If you're scared of a vacancy then you shouldn't be in this business. Vacancy is a normal part of the business. You're assuming that if he can retain these tenants that all is good. These are students and they will leave soon enough. Leaving now instead of a year or two from now does not make a difference. Walking distance to campus sounds like this will be a super easy rental with very little downtime.

I wouldn't cut the rent by $150/month. The other two units rented for $1250. Great! Are they available? Nope, they are rented, so they do not factor in the pricing decision of this unit.

If you're willing to cut the rent to play it safe, how low do you go? If other units are $1250, perhaps you should go even lower as you know these are good tenants. How about $1200? Isn't losing that extra $50/month worth keeping a good tenant?

Never said I was scared of vacancy. I said properly managing vacancy and turnover is the key to being a good operator and your bottom line. Too many people focus on getting absolute top dollar and then lose money on the leasing fee and vacancy/turnover cost. Ends up costing you more. I’ve seen this happen plenty of times.

He has an above market unit. Even he admits it. I’m going on just what he said. If there is other units for $1250, than he is above market. Giving them a price break isn’t insane. If other units had rented for $1600, I’d bet he’d want to raise the rent.

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From what I know, you can’t 1031 into land

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Originally posted by @Greg M.:

I would not lower the rent. They were OK with it at $1400 and they should still be OK with it at $1400. The odds of them moving to save such a small amount of money is slim. Call their bluff.

They’re students. Moving is easy. If the similar sized units rented for $1250, I wouldn’t hesitate to lower the rent. $150/month is a decent amount of money.

Calling their bluff can cost the OP $1400-$2800. Not worth the risk. How long will it take him to earn that money back?

Turnover/vacancy management is what makes the difference between a good operator and a bad operator.

1 Vote

Rent roll and leases. Everything else you should have your own assumptions on.

I've never understood people that ask for tax returns; etc. I would never hand that over myself & I've never had any client hand it over either. All depends on your market though. Also many people own more than one property under an LLC

1 Vote

Originally posted by @Jonathan R.:

0. I figured out how to buy the properties, I‘ll figure out how to maintain the properties. I do try to do a full rehab initially. As I keep buying more properties, the cash flow monthly grows too, that helps.

How many properties/units do you have? How many cycles have you been through?

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Originally posted by @Ronald Rohde:

Originally posted by @Syed H.:

Unless each property is worth millions, no. Easier & cheaper to have 1 LLC & a large umbrella policy.

Do you mean property value? Free cash flow? Or equity?

I reference the amount of equity an investor has in each property for determining how much is at risk by combining properties.

Property value.

0 Votes

All Forum Posts by: Syed H.

Syed H. has started 0 posts and replied 743 times.

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Post: Cap Rate Historical Trends

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Post: Problem Free Tenants Request Cut in Rent for Renewing Lease ???

Post: Arbitrage a 1031 in land??

Post: Problem Free Tenants Request Cut in Rent for Renewing Lease ???

Post: Things to ask Seller of multifamily

Post: What do you budget for reserves and CapEx?

Post: Do you need LLC per investment property?