Need help crunching numbers... - Posted by Matt

Real Estate Investing
#1

Posted by Sean on July 26, 2001 at 17:38:07:

Go to http://www.titleadvantage.com/ and set up an account for free. Pull up the property by the address and click TOPS. Click comparable sales. That should be a good start, but it’s far more important to have comparable rents and that’s harder to do.

#2

Need help crunching numbers… - Posted by Matt

Posted by Matt on July 26, 2001 at 13:41:08:

Here’s what I know:

  • 2 Flat
  • Each Unit 3 bed / 1 bath
  • 1997 Rehab - So reasonably good condition.
  • Previous rents were Section 8 at 800/month.
  • Total Price $144,000 (Back Payments, Loan Payoff, Late Fees)
  • Building empty since April in Pre-foreclosure (Owner tried to get tenants out to complete a sale earlier this year, but when one of the tenants didn’t vacate quickly enough, she lost the sale.)
  • Owner just wants out.

Here’s what I need to know:

  • How do I find recent sale prices on comparable properties in the area?
  • How do I find average non-Section 8 rents for similar spaces in the area?
  • How should I structure this deal assuming the owner will accept Subject to or PacTrust if I want to do an immediate flip (Building is in a rather shady area of the city)?

Thanks in advance. This is potentially my first deal so I’m a bit nervous, but ready to tackle it if things look good.

  • Matt
#3

Re: Need help crunching numbers… - Posted by Randall Porter

Posted by Randall Porter on July 26, 2001 at 14:41:51:

This certaintly doesn’t look like any kind of deal to me. It will take cash to bring the loan current and pull the property out of foreclosure. Do you have the cash avaliable to do that? Then you said you want to flip the property to someone else. I don’t think any experienced investor would be interested in a building at a price near $150K that only brings in $1600 month. The cap rate on this would be around 7-8%, which is very low for this type of property. I think you need to pass on this deal.

#4

How do I find FMV and comparable rents? - Posted by Matt

Posted by Matt on July 26, 2001 at 15:41:36:

Thanks for the opinion Randall, it’s reassuring to see that we’ve come to the same conclusion using the numbers I posted. However, the reason I didn’t ask if the deal makes sense is because the area is changing rapidly so I can’t rely on those numbers. She had been renting in the past at 800 (Section 8), but I think that I (or another investor) can get more now. It’s a pretty scary area of the city, but there’s been a lot of construction in this section and it looks to be getting nicer.

Can someone please tell me how to research:
What the comparable rentals in the area are charging?
How much the newer buildings and comparable buildings in the area are selling for?

It’s a strange case for an older building because it was rehabbed a few years ago and the building is in good condition.