All Forum Posts by: Won Lee

Kofi,

I have a question for you. Near Portland OR, cap rates are ridiculously low for commercial properties around 4-7%. But when I drive around industrial areas near airport, every single building have open spaces available for lease. There seems to be a ton of space available.

So why do cap rates continue to go down. There seems to be little value in most commercial properties around here.

In hot markets, do you feel there are any more opportunities right now?. Or do we wait for a correction. REIT's getting hammered over past few months and elf's that are double inverse commercial real estate look like its taking off now. Has the correction started???

I am looking at a deal in a small town where a ground lease has been offered to me(i.e.-just buying the land the building is on).

It is my understanding that the taxes and insurance will be covered by the tenants of a small strip mall(6 units) on the ground I will own. Most of the leases are 20-30 yrs in length.

I would have first position over the lending bank that financed the building it self is my understanding.

The ROI is very good. Even the parking lot maintenance is done by the building owner(he has a business in one of the units).

I know some banks and investors don't like to work with separate owners of the land and building but in this situation, the building has already been on the ground for decades producing income.

Are there any downsides to just owning the dirt???

Seems like a very low risk situation compared to buying the land and the building for commercial.

Thx.

wow, how is this possible?...cash flow 15K on a 20K down payment?...ROI 75% assuming no huge capex or maintenance issues?

I need to move to IL!...great job OP.

OP, I am far from an expert but if you are planning on selling your place of residence, don't think you even need to do a 1031...think you are exempt up to 250K per person(hence 500K per couple).

But 1031 for investment properties definitely the way to go to avoid taxes.

Also, if you plan on doing a flip in the state of WA, think you need to work with contractor or get a general contractors license, which is somewhat easy to get in WA from what I hear. Don't even think you need to take an exam.. just apply, pay, get insured and bonded, etc.

I have been looking for the past month at multi fam's in the PDX and Vancouver area also and I can say, I haven't seen anything worth buying. Older units are caping at 6-7 around here and to me, that implies you are getting pretty close to a top.

The guys with a lot of experience all saying you have to be super selective  right now.

Whats even worse, to get to that cap of 6-7 you are usually getting pro forma or fantasy numbers! The nicest areas in PDX(condos in NW PDX) are capping at 4 if you can believe that.

Obviously the price difference between a cap of 6 and 8 is huge.

The only thing that makes sense from number standpoint is a brand new duplex where you know hat you will probably get in rent and you know taxes and insurance, and there shouldn't be much maintenance or capex since the units are new. Older units seem more like a crap shoot. Buying a 3000 SF duplex for 400K can probably get to 10% ROI. Owners are loving it cause vacancies around here are at 2% and cap rates around 6-7. Sellers mkt!

OP, you might want to look at Spokane, there are more reasonable deals in Spokane but the rents are really low there.

Thx for the replies, with further investigation, the area I was looking really isn't generating over 10% ROI...I was looking at Spokane and although prices are really cheap there, rents are very limited ...1 and 2 BR units only fetching 400-550.00 a month.

Where I live, the market feels bit toppy and things very spendy. Cant find any multi properties that will yield 10% ROI.

Would you guys/gals buy in an area "less hot" if you can buy for 60.00 a SF but there is a very low chance for appreciation. This is in modest size city in Washington with a population of 200K and maybe 500K if you include suburbs. I use to live there 15 years ago but the prices are very similar to when I was there, so I doubt there will be much appreciation here. Don't think I could raise rents significantly either. But I can generate 10-15% ROI here so buying a multi here would be mostly for income.

Do you ever buy for income only and without  much possibility of appreciation also????....thx.

I am also new and also in the PDX area...I get the sense it is pretty tough to get started in PDX area as its pretty expensive.

OP, like you, I just shake my head when I keep reading on here people buying 4 plexus for 150K and 10 units for 300-400K.

I just looked at a new construction duplex at 125.00 a SF in Vancouver that should cash flow close to 8%, maybe 10% if you are lucky.

Think I will also try to make it for the Rarebird meetings too.

Sounds like you are well on your way though.

Thanks guys. I just read the assignment section of the operating agreement and he would need to sell, assign or dispose of his share in the LLC to me. Sounds like more trouble than its worth to dissolve or transfer his share to me.

Think it would be easier to set up a new LLC in my name for 200.00!

Thx again.

Guys/gals,

Here is my situation. I set up a LLC with a partner awhile back and we have a bank account set up. Well my partner isn't financially ready to do proceed but I am. He said he didn't care if I removed him from the LLC.

So is it easy to remove a 50-50 partner in our LLC?. Or is it not worth the hassle and should I just set up another separate LLC in my own name?? It was kinda a modest hassle to set up this LLC from what I recall(did it 3 years ago).

Thx.