All Forum Posts by: Tyler Thorson

One thing that might help is to remind yourself regularly that equity = assets - liabilities.  

If you have 50k of debt because you went to the casino and blew it, that's -50k.

if you have 50k of debt against a 75k house, think of it as +25k (rather than thinking of it as 50k you have to pay back).

@Rick Grams .  Ah I misunderstood.  I thought you were the buyer and I was trying to be kind about it.  

As the seller I'd also pass because I don't understand how it doesn't just come back to you in 6 months with not much gained for the headache.  

What is NOI on the property?

The implied cap rate seems very low as well.  I'd pass.  

If your rent is 12k your going to have trouble servicing debt of 10k pretty quickly unless you have reserves.  

Quite the typo from the OP!

Generally in this situations I'd lean towards selling for the clearing price. But it's worth running the math as a rental to see how it looks.  Same question as Chris, are you 100% equity?

I personally would put the more energy efficient windows in as long as he renews for at least 3 years.  You'll get an extra 3600 over the course of his lease and at the end you'll have a better building.  Maybe he stays an extra year if he's happy.  Or, if you sell while he's in there, you probably get some value for the extra income potential.  

Ok. Let's address Apple. The current enterprise value of Apple is $3.15 trillion. That's a big number as you point out. In the last 12 months Apple earned $137b of EBITDA (earnings before interest, taxes, depreciation, amortization). To put into real estate terms, you can think of this metric as roughly equivalent to NOI. Therefore, if we stick with the real estate analogy, Apple trades at a 4.3% cap rate. Is that too rich as you suggest? Perhaps. But that's another discussion.

Jacob. You are misinformed. A REIT could have 15 billion shares.

Think of it this way. You have a REIT with one building worth $100mm. That REIT could have 100 shares worth $1mm each. Or it could have 1mm shares worth $100 each. It could have any amount of shares and it wouldn't change that there is $100mm of real estate.