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Properties Doubled in Value since 2007 - Too Good to be True?

RE123RE

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Hi,
A banker sent 2 appraisers to appraise 3 properties my partner and I have in small cities in Ontario.
On average based on the value the appraisers provided back to the bank, our properties doubled in value on average since purchasing them in 2007. Sounds good. Is this possible?
For example a 6-plex purchased for around 300K is now 600K.
Thanks
 

Matt Crowley

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It could be depending on what you have done to the properties... but before you refinance, can the rents support a higher mortgage payment? If the yield becomes too low on the properties it may be worthwhile consider selling.
 

RE123RE

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It could be depending on what you have done to the properties... but before you refinance, can the rents support a higher mortgage payment? If the yield becomes too low on the properties it may be worthwhile consider selling.
Hi,
You don't need me to tell you the answer. All you need to know is that CAP in Ontario's small cities is > 5%.
Just do the math and you will see 5% CAP properties carry themselves with today's interest rates and the standard 75% LTV, 25 years amortization. (or 70% LTV or 80% LTV).
Thanks
 

Matt Crowley

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Sorry, I was under the impression you asked a question to get an answer?

The answer isn't as obvious as that. It depends on your capital structure. Mezzanine debt, HELOC, investor interest rates.

The answer depends on what you did to improve the properties as well. As non-multi values are driven by improvements and comparables whereas multi values are driven by NOI / cap rates.

Maybe don't post questions you don't want answered next time.
 

RE123RE

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Sorry, I was under the impression you asked a question to get an answer?

The answer isn't as obvious as that. It depends on your capital structure. Mezzanine debt, HELOC, investor interest rates.

The answer depends on what you did to improve the properties as well. As non-multi values are driven by improvements and comparables whereas multi values are driven by NOI / cap rates.

Maybe don't post questions you don't want answered next time.
Hi,
You are correct. It was kind of a rhetorical question.
Thanks
 

RE123RE

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Good luck!

Hi,
Sounds like you have a lot of potential to contribute. Just try to phrase your responses a bit better and maybe elaborating a bit, and your value add will be significant again.
Thanks
 
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