You may have noticed my absence Thursday and Friday, while I was in sunny Greensboro, North Carolina (sunny as oppose to Ithaca, NY). While the trip was a short four days, I met tons of contacts and had a very interesting introduction to the market. There are so many things to talk about, I am going to break them up by topic and try to write them up over the next couple of days. Today, I want to talk about the savvy investor.
I began the journey meeting my agent at the airport. I worked very hard in selecting an agent that I thought would offer me a good look at the market, with an objective opinion on pricing. My goal is to always try to choose an agent, who has experience in the market and is hopefully equally savvy (or more so).
The first problem I encountered right away was a language barrier. I thought cap rates were the universal language, so I assumed that all commercial pricing would be based on local cap rates. Wrong! My agent informed me that the pricing assumptions in Greensboro were based on an assumed appreciation rate of 1-2.5% a year. Interesting… As I stretched my mind to try to understand this concept, I made an assumption that rents would be increasing by at least that or that despite what I saw with my eyes there was a rush on small apartments in Greensboro. Of course, neither was the case.
Interestingly enough, when I made some calculations based on my own models most of the properties I looked at were in the 6.5-7.5% cap range. Although the rates seemed very aggressive for the Greensboro area, every property I looked at fell into this range. My next stop was a commercial mortgage lender. As I sat down in his office, I wondered if everything I had learned in life and in school did not apply in the town of Greensboro or if other investors were just plain crazy. I say this specifically because of all the properties I looked at only one of them was actually Read more
And this is the third of our podcasts with mega-producing Realtor and BloodhoundBlog contributor Russell Shaw. This segment is a freeform colloquy between Russell, my wife and business partner, Cathleen Collins, and myself. We hit a vast array of topics, including Russell regaling us with a story about how he once confounded 18,000 “stoned hippies.”
Norma Newgent is a Realtor who lives and works in Tampa Bay, FL — and has never lived anywhere else. She has a degree in Public Relations, but prefers helping people buy and sell homes.
