here in Canada, we are seeing increasing office tower vacancies due to WFH patterns set in. Large offices are shrinking their footprint. On the other hand, there is a shortage of housing supply. This creates the opportunity to convert older office buildings into residential ones. Do you have any thoughts on analyzing deals for this conversion potential, which variables can make this risky or profitable? There may be acquisition opportunities for such non-performing assets in the near future.
Even in an unlevered basis, cap rates are based on the purchase price and don't take into account any closing costs, fees, etc; and in the operations side don't take into account any capital improvements and cash reserves, while cash on cash do. Excellent video, Justin.
Just to clarify: when you say that "Just because the interest rate is lower than the cap rate, this does not mean that debt is accretive to returns," it is because you need to account for the amortization in the loan terms, which the Loan Constant takes in to account? However if the loan terms are interest only for a period, a comparison of cap rate to interest rate would be enough to determine positive and negative leverage?
Great stuff, you've been really helpful with your rich educational materials in the past few years. Real estate is really addictive once you click with what needs be known. Thanks!
Love your videos and modelling classes Justin, keep up the great work. Quick question on IRR v. CoC......IRR obviously needs a future disposition in order to yield a useful metric. If you plug a very large hold period into the models, unlevered return becomes negative. Would you just use something like Stabilized Yield on Cost to assess the value of a deal in this situation or is there a better metric for properties with a long-term hold?
Would you be able to make a video on a career as an appraiser/ valuation and advisory analyst? What’s the job like? How does it differ from careers in development, acquisitions, sales, etc? Compensation? Work/life balance? MAI designation?
Hi Justin, thanks for this video! Loved it. How can I get on a call with you for mentorship purposes? If I pay the $99/month, does that get me a 30 minute call with you? Please let me know as I am going through a very serious interview. Thanks.
My head hurts... 🤣. Anyway you can dumb it down a bit?... like actually. I'm currently in the research phase of my STR journey. I've been looking all over YT for 2022/2023 videos utilizing AirDNA or Mashvisor to purchase a property, but it's been hard to find a good video explaining daily rates, cap rates, ROI, cash on cash, etc. and how they correlate to one another; limitations and other things to consider. I've seen IRR thrown around, but it's been difficult to wrap my head around how this correlates to the aforementioned- a very steep learning curve. I'm requesting a simplified version of an in-depth review of AirDNA and/or Mashvisor!!
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