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-> Household Management
-> Finances
amother
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Fri, Feb 21 2014, 8:23 am
Hi, we are iyh buying some real estate, and since we are new to this... My husband is speaking to his experienced friends... But just wondering, anyone out there who can advise me? I'll be taking care of paper work... Anyone out there who can give me some advice? Tia
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amother
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Fri, Feb 21 2014, 10:17 am
Go over the numbers very careful, do no rely on what the realtor tells you.
If the building is full find out how long the tenants they been there, if they were give discounts to move in (like 3 months free rent, no deposit, etc) and if they are up to date with payments. (Sometimes to fill a building before selling the owner will offer all sorts of discounts so the vacancy number are very misleading.) See if you can get numbers for the vacancy for a few months before it was put on the market.
find out gas, electric, water bills for the building. What do tenants pay. See numbers for multiple months and years (winter and summer). How old are major fixtures (I.e. Old boilers that can cost 60,000 to replace). What is yearly maintenance on large items (elevators, etc).
Taxes
What is the neighborhood like. Is there a seedy bar on the corner? Is there a drug problem? What is it like at night?
Who handles the maintenance and leasing currently - does someone live there full time, what is salary - is he on call 24 hours? Does he live in an apartment?
What is your winter maintenance like - shoveling snow, plowing?
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amother
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Fri, Feb 21 2014, 11:31 am
Thanks a mother for responding. Yes, we have gotten all income and expenses from them, we like the place and area... We have given a conditional offer on inspection and finances... They said they'll only give more info, after we give offer, like show all paperwork.. Make sense? Also, the cap rate is a bit high.. Is that something to be concerned about?? Thx
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m+m
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Fri, Feb 21 2014, 12:05 pm
Calculate your closing costs. Many people do not realize the expense of closing on a home and it comes as a surprise. It can be about $4000, but I am not sure my numbers are completely accurate.
A good home inspection is very important. Don't go cheap on the home inspection, if there are serious problems than you want to know about it beforehand.
Also, find out if your real estate taxes are higher than they should be and if they are you can get them reevaluated. You may need a lawyer to do this but you can end up saving quote a fortune.
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STovah
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Fri, Feb 21 2014, 12:25 pm
If you are comfortable with the numbers the seller gave you, and you've done your own due diligence as to whether the numbers make sense for that area, those tenants, location, zoning, etc., then then fact that there's a high cap rate shouldn't matter one way or the other.
If they are selling you a >6 cap property in NYC though, I'd go over the numbers and the property with a really really fine tooth comb.
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amother
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Fri, Feb 21 2014, 2:00 pm
Op here thx to all responses appreciate it! How would I find a good inspector? Googling there's tons! And not all I'm sure r good... Anon, a cap rate is your return on the property. Take the net income and divide by purchase price to get your cap.
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amother
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Fri, Feb 21 2014, 4:35 pm
Esti's Mom wrote: | Calculate your closing costs. Many people do not realize the expense of closing on a home and it comes as a surprise. It can be about $4000, but I am not sure my numbers are completely accurate.
A good home inspection is very important. Don't go cheap on the home inspection, if there are serious problems than you want to know about it beforehand.
Also, find out if your real estate taxes are higher than they should be and if they are you can get them reevaluated. You may need a lawyer to do this but you can end up saving quote a fortune. |
Just for your info. I know another isnspeakjnv abt a building and I know nothing about that but on a residential home closing costs are more than that. In Rockland county they start from abt 24-20k.
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amother
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Sat, Feb 22 2014, 8:50 pm
is ur dh looking for a partner?
we have money to invest and would be interested in something like that...
dont even know where u live tho
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STovah
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Sat, Feb 22 2014, 9:24 pm
amother wrote: | Anon, a cap rate is your return on the property. Take the net income and divide by purchase price to get your cap. |
Just to clarify, you are dividing the net OPERATING income and dividing by the purchase price - you'd exclude your mortgage interest from the calculation.
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STovah
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Sat, Feb 22 2014, 9:27 pm
amother wrote: | Just for your info. I know another isnspeakjnv abt a building and I know nothing about that but on a residential home closing costs are more than that. In Rockland county they start from abt 24-20k. |
$24K of closing costs on a private house!?! How large of a mortgage are people taking out there? Maybe you're referring to the real estate taxes that you have to pay at closing to reimburse the seller for what he's paid out for the period already?
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