| Author | Message | ||
| Martin (Miami348ts)
Intermediate Member Username: Miami348ts Post Number: 1757 Registered: 5-2001 |
I bought a property in Downtown Miami. It is a very bad area today but I believe Downtown Miami will get its glory back and one day will be just like all the other areas. Today I can barely get $10/sq ft in rent for office space there. Just two blocks south on Brickell Ave they get $40.00 and more! Literally 2 blocks down. | ||
| Martin (Miami348ts)
Intermediate Member Username: Miami348ts Post Number: 1756 Registered: 5-2001 |
The Real Estate Gods may shine on you! Just outside of New York, that is no question to me that this is a good investment. | ||
| David Jones (Dave)
Junior Member Username: Dave Post Number: 93 Registered: 4-2001 |
We restore old homes in the historic district of downtown Little Rock. Not as a job, but as a sideline... And while we are not doing it to get rich, we have doubled our investment each time. Example, our current home was purchased for 43,500. now valued at 385,000. But the best part of doing this is when we look at a neighborhood that was once all trashed up, that is now a show place. When we bought our current house, it was crack house apartments. After renovation a wonderful victorian. The historic district here is being transformed from "The Hood" to a place where doctors, judges, and the like are moving to, from their former posh addresses... And all it took was a few fools like me who were willing to take a risk on a less than questionable property. | ||
| Martin (Miami348ts)
Intermediate Member Username: Miami348ts Post Number: 1747 Registered: 5-2001 |
Octavio, I frequently put these together.  I must say though that I have a great reputation in town so people do not fear the 2nd position. My philosophy is though not to over extend yourself in a deal. Borrowing too much money can end in catastrophy. Savings & Loan is the best example. All the japanese investors that went belly up when the market hit low. Trump on the brink of bankrupcy. These are the results of too much borrowed cash. Most of my properties are 50% equity. I usually start high in the financing 90% (with the second) and bring it down fast to 50-60% LTV (Loan to value). The Sept 11 aftershock has not affected my company at all. We had 10,000 sq ft of vacant office space all of a sudden, but going still strong. There is only 1000 left and a development that is not yet completed with 4000sq ft but has already signed leases. 90% is pretty easy to do. Of course not everybody will do it. | ||
| wm hart (Whart)
Junior Member Username: Whart Post Number: 188 Registered: 12-2001 |
argyle: joe valvano(or his wife terese): 914 693 5476. They do high end residential in the hudson river towns, but they've been around and know everybody. Tell 'em i sent you, and ask for the most knowledgeable people in commercial stuff; also ask joe what he thinks, since he's pretty savvy and knows the market around here. (just to amuse you , when i lived in brooklyn heights, i got to know a guy who was a full time writer. He paid for that by buying and selling "risky" properties. The last time i saw him, a few years ago, he had bought a toxic waste site on the gowanus canal (which if you know NYC, is like buying something that used to be an oil repository on top of a charnel house; you could smell the canal for quite a distance and there were nasty dead things, occasionally people, floating in it). Less than a year after he bought it for next to nothing, there is a massive, subsidized cleanup, and the canal will be dredged and fresh water running through it for the first time since WWII. | ||
| Tim N (Timn88)
Member Username: Timn88 Post Number: 630 Registered: 6-2001 |
Mt. Vernon may not be the nicest place around. Some places in it are just shitty, but right next door is bronxville, which is a pretty nice place to live. northern westchester is growing rapidly, there are probably some investment opportunities there. | ||
| wm hart (Whart)
Junior Member Username: Whart Post Number: 186 Registered: 12-2001 |
Argyle: I will call my guy and discuss your situation with him, before i have you call him. I have talked to him about residential deals in westchester, and he is a straight guy. be back to you. | ||
| Octavio Mestre (Alfab4308)
New member Username: Alfab4308 Post Number: 49 Registered: 7-2001 |
Argyle, to expand on Martin's point about the seller contribution, if the market will not permit you to get that from the seller you can also have him agree to raise the sales price by the amount of the contribution so you have to bring less cash to closing. Nothing illegal or improper about this so long as it is disclosed in the contract. Martin, if you are getting into investment property that meets the return criteria with ony 10% down you are "the man". I would not want to be holding that second mortgage, though. Good point about using the realtor commission to cover some of the down payment too. | ||
| Martin (Miami348ts)
Intermediate Member Username: Miami348ts Post Number: 1742 Registered: 5-2001 |
On a jumbo like that usually 70% here in FLA. There is creative ways around that though. Let the seller hold a 2nd mortgage for 20% and come in with only 10% You can guarantee him a pay-off in 5 years and set out to refinance in 5 years for 70% again and have the increased value of the property as a new security. If you own a real estate company as well and you deal with a "by owner" add 7% real estate commission and maybe a 3% seller contribution and your cash out of pocket is minimal. I love these deals  | ||
| TomD (Tifosi)
Member Username: Tifosi Post Number: 472 Registered: 9-2001 |
what do they let you mortgage on these types of props - 80% | ||
| Martin (Miami348ts)
Intermediate Member Username: Miami348ts Post Number: 1737 Registered: 5-2001 |
...now that could be the reason as well Actually when we sold this property I did not have my Ferrari yet. I wanted to buy another property at an auction in our building in Bay Harbor and was in a bidding war and ended up not buying it. That is when I said, "F*ck that, I am going to buy a Ferrari" | ||
| Octavio Mestre (Alfab4308)
New member Username: Alfab4308 Post Number: 48 Registered: 7-2001 |
Investment property is analyzed by return on investment. You will not be living there so (all else being equal) you should not care what it looks like or where it is. I have clients making great money in neighborhoods I�m afraid to venture into after dark. A typical return demanded by many of my clients is at least 10% without taking into account appreciation of the property which is what Martin�s formula will give you. The low turnover is a good sign. It also might mean that the tenants are paying below market rent and that you can squeeze a higher return out of the property by raising the rent. If they are elderly people, though, you can probably forget that without losing a bunch of tenants. I can�t stress enough the importance of getting a knowledgeable real estate attorney involved BEFORE you sign anything or make an offer, especially since you are new to this type of investment. Always remember that the broker makes no money unless you buy so take their advice with a grain of salt. Good luck. | ||
| TomD (Tifosi)
Member Username: Tifosi Post Number: 471 Registered: 9-2001 |
martin The reason you feel great when driving by the property is because you are driving your F-car not becuase the trees you planted are still there. | ||
| Martin (Miami348ts)
Intermediate Member Username: Miami348ts Post Number: 1733 Registered: 5-2001 |
When I buy property is look for long term value, stable immediate cash and nice appearance. I am proud of my properties. I improve a lot to be even prouder. A property I bought in 1999 for $ 180,000 and renovated, I sold in 2000 for $240,000. The trees I planted are still there and growing. It gives me a great feeling to know that this was once my property and it still looks great. The same property I learned today is back on the market for $ 400,000. | ||
| Martin (Miami348ts)
Intermediate Member Username: Miami348ts Post Number: 1732 Registered: 5-2001 |
I think you have a winner! Have it inspected and at 1.5Mio you are good at less than that you are better Sounds like a good building. As far as how do they pay I was more concerned about 50% of them paying 20 days late! But it sounds like a good building. Check with the Mayor and maybe some commissioners on their vision for the City. Always pays to know the head of the town. | ||
| Argyle Co (Argyleco)
Junior Member Username: Argyleco Post Number: 55 Registered: 3-2001 |
Does the NOI reflect vacancy rates? Yes, 2% Are these the actual vacancy rates? 8 people moved out in the last 15 years, per conversation with Super Does the area warrant the tenants rent payments? Yes How do they pay? The average rent is $700-750 for 1 bedroom How many evictions in the last 24 months? None, per super, one vacant apt now because tenant moved to senior citizen home. How much turn over? 8 in last 15 years | ||
| Martin (Miami348ts)
Intermediate Member Username: Miami348ts Post Number: 1731 Registered: 5-2001 |
Boiler, funny when you are down here in miami you don't think of those things. You ask is the AC system okay and when that was replaced I have a rule: NOI x 10 = purcahse price. So $150K x 10 = 1.5 Mio. Does the NOI reflect vacancy rates? Are these the actual vacancy rates? Does the area warrant the tenants rent payments? How do they pay? How many evictions in the last 24 months? How much turn over? | ||
| Argyle Co (Argyleco)
Junior Member Username: Argyleco Post Number: 54 Registered: 3-2001 |
Tom, Net is after all expenses (utilities, salary, taxes) basically it will be 150k minus the mortgage of about 96k per year. As far as improvements the building has a 4 year old roof and a 1 year old boiler. | ||
| TomD (Tifosi)
Member Username: Tifosi Post Number: 470 Registered: 9-2001 |
basically you are making 10%, is net after financing expense? - financing on commercial has got to be over 8%, does it need major improvments, any lease escalations? Lot of things to look at | ||
| Argyle Co (Argyleco)
Junior Member Username: Argyleco Post Number: 53 Registered: 3-2001 |
wm hart can you give me the names of the people in the area that can help me out, thank. The gross annual income is 250k and the net is about 150k. Askingon the property is about 1.6. Let me know what you guys think, I am new to real estate investment and can use all the help I can get. Thanks in advance | ||
| Martin (Miami348ts)
Intermediate Member Username: Miami348ts Post Number: 1726 Registered: 5-2001 |
basing it on gross is kind of risky. always go with the NOI (Net Operating Income)Make sure to get the real expenses from the past 2-3 years. Let them show you tax returns on their corporation if need be, or get the income and expenses verified from their accountant. In writing of course! | ||
| Martin (Miami348ts)
Intermediate Member Username: Miami348ts Post Number: 1725 Registered: 5-2001 |
doing this for a living my approach is simple. If it makes you 10%+ profit after real expenses you are doing all right especially if you invest in an area that has to potential to grow. Mt. Vernon might be right up that alley. If it is depressed now but close to the City it should come back. Have a meeting with the mayor and see where his future is. The cost analysis is also important. Gent a good real estate professional. Not Joe Blow from the next sign. Find a persona that is super knowledgable. Knows commercial real estate in that area. Make sure the property is rented 100% if not deduct from the price for each unit unrented. | ||
| TomD (Tifosi)
Member Username: Tifosi Post Number: 469 Registered: 9-2001 |
while you can do various analyses the best is get some comparable properties (same town/similar condition/simliar income profile) and find out what they recently sold for. | ||
| wm hart (Whart)
Junior Member Username: Whart Post Number: 185 Registered: 12-2001 |
Are you familiar with this area? Mt. Vernon is not necessarily the height of Westchester living, and has problems. It should not be comparable in any way to NYC properties (even the south bronx and Harlem are booming); i know real estate people in the area and can put you in touch, if you need somebody. | ||
| Argyle Co (Argyleco)
Junior Member Username: Argyleco Post Number: 52 Registered: 3-2001 |
Sorry guys but this topic has NFC. I am in the process of purchasing an apartment building for investment reasons. How do I evaluate the price of the property, I have heard that in the NY are is goes by the gross income multiplied by 6-10 times depending on the location. I heard in NYC its about 10 times and in Queens, NY it's about 8 times. My dilema is that the property I'm looking at is in Mount Vernon (Westchester) NY, so what do I do in this instance. Again sorry for the NFC, but I thought someone on the list might be able to help me |