All Forum Posts by: Tyler Veres

You would need to run a title search.  I assume you can do it at the registry office.  We've usually had the lawyer run the searches.  Should show all parties on title and liens, etc.

My $.02 in regards to reinventing the wheel. I am by no means an expert so take my advice with a grain of salt. I think that if you are proficient with excel (not even proficient, literally just capable) I would build the model yourself. Really will comprise only a couple main sections (for lack of a better term). You're looking at income (gross from all sources) less any vacancy and bad debt. Then, net off all operating expenses (not including financing) to get your NOI. This is a great exercise as it gets you thinking about all the types of expenses (ie. will there be a prop. manager, what will you allocate for repairs and maintenance, cap ex, utilities, etc. Are you in a region where snow removal may be necessary? Always going to have taxes and insurance, although perhaps some of these can be downloaded to tenant) By playing/inputting these numbers, and building the spreadsheet yourself it shows exactly how each one affects your bottom line, and therefore your value. Apply a CAP rate to your NOI to estimate value. Buy doing this, you can see how great small amounts in NOI reflect big swings in value. Also drives home relationship between NOI and value. Finally, will make you really analyze your debt service, as what is left over in NOI goes towards the mortgage. By doing it yourself, you are much closer to mastery (I think the final test of mastery is teaching someone else) and I think falls somewhere in line with the the old "catch a man a fish..." lesson. It may be painful at first, but in all honesty, I think you could have something really workable and usable within a couple hours. This is the approach I would advocate, more for the fact it gets you into the weeds. That's where the value is.

Best of luck!

-Tyler

Am I the only one getting a strong Glengarry Glen Ross vibe with the "brass balls".  Hey look, its Alec Baldwin's balls!  I think we found your slogan.

Another way of looking at the CAP rate is that if you bought the property for $187,500 all cash (ie no financing), your expected return is 8% annually.

Oh, I adjusted your monthly rental income to $2200 (as per your 11 month strategy to account for vacancies).  brings net income to $432/month.  then subtracted your $100/month that you had said you budgeted for turnaround repairs to get to $332.

and I live in the wrong country to be a real estate investor when you can buy a townhouse for 239k and rent it out non-inclusive of utilities for $2400/month.  Maybe thats why the smell test doesn't seem right for me with price to rental rate.  Don't let my skepticism dissuade you, I may just be in a completely different market.

Ok, all other things being equal, your best case scenario net cash flow looks closer to $332 per month.  By the sound of the thread, it seems the seller (assuming the builder) is quoting rental rates.  I would not trust the seller, but if you feel that those are the correct rates, I would say 300 bucks a month is your net cash (using your assumptions).

and when you say 11 month assumption for revenue, does this mean the rent is 2400/month and therefore effectively 2200/month for budgeting purposes?  (2400*11/12)

who pays utilities?  if it's the occupier, I'd be very skeptical on who will pay $3,000 a month to live in a townhouse that costs $239,000

I dont want to suggest a crazy number for using a student loan as a DP. I'm thinking like 10-15k.