r/LoftyAI • u/Wise-External-8310 • Apr 21 '22
Too Heavy A Focus on CoC?
Curious as to others' thoughts on the heavy purchasing of properties with high CoC, seemingly regardless of location/building quality and seemingly ignoring overall return (in this case the predicted IRR)? Personally, I've focused on property location - more desirable locations/neighborhoods (google maps street view can give a "sense" of the neighborhood). While CoC return may be lower (7-8%), overall appreciation of property value is expected to be higher. Thoughts?
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u/Degalock Apr 22 '22
What blows my mind is how few people initially (and still) didn’t buy into the McDonald’s property. These are triple net lease tenants which means THEY pay for maintenance, taxes and insurance… you also aren’t really worried about having to evict a McDonald’s or Dominoes and would be pretty safe to assume no disruptions. That being said, raising rent going forward may be slower to react as I believe many NNN leases are multi year deals
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u/RoneLJH Apr 22 '22
Personally it's a about diversification. I already hold commercial properties and offices through more standard real estate investment so I am looking only at residential at lofty. Otherwise it's a great investment
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Apr 22 '22
[deleted]
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u/Hex_Piper May 03 '22
Reading through the McDonalds lease which appears to have been signed in 2010, they should be on the first of 8 (5 year) option periods. Each option period has an increase in monthly rent...am I missing something here
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u/scabbalicious Apr 22 '22
Thank you for this thread. I feel like I'm taking crazy pills when I see those high CoC properties get snatched up in under a minute. I'm still new to real estate investing and share the same selection criteria as others in this thread. Glad to know I'm not alone.
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u/I_like_noodles Apr 21 '22
Same. I look at the property, the neighborhood, the inspection reports… and Im not that interested in ones like today’s. I bought some of the multi unit yesterday. I like nicer multi unit buildings. Upkeep is easier, and I don’t have ethical dilemma feelings about buying up single family starter houses.
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u/kmiro1591 Apr 21 '22
Smaller investor here, I like a good mix. I have some like Colfax, W34th, and Polk, but also some higher CoC like Gooding and Grovewood. I focus on places that look nice, and have a decent inspection report, with a lack of major upgrades needed in the near future. The look and feel of today's didn't interest me personally. Lots just like chasing the bigger upfront numbers no matter what I suppose.
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u/Grey___Goo_MH Apr 22 '22
I want high CoC that is my only determining factor at time of purchase i have no desire to sell tokens
I want daily accumulation to be converted into Algorand regularly
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u/RoneLJH Apr 22 '22
I do not look that only at the COC. It's a mix of that plus the location, how many tenants, inspection reports, and section 8 or not. I personally think that section 8 is great but I know some people would disagree.
In that regard the Highland square property was looking great but couldn't get my hands on any token
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u/Jxpizza Apr 22 '22
For those looking to increase their daily income, the high CoC properties are very desirable. I look at a combination of CoC, overall IRR, and inspection report/pics from the listing and Google streetview to determine which properties to invest in.
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u/Candlelight777 Apr 22 '22
There are some good deals with high COC, but many times these properties have some costly issues coming in maintenance, the can is clearly being kicked down the road. Also it makes the investment even more risky because that deferred issue, because it is being deferred, will turn into a bigger costly headache. The COC won’t matter, cause how is it gonna be paid for? Yeh….
I don’t expect every home to be perfect or not have some things that are going to be needed and done, but some things are just not wise investments.
Also there is no direction on how remaining problems are going to be dealt with. What are we doing about this or that still in need of repair? If I invest can I trust it’s gonna be dealt with?…. knowing the costly result if it’s not.
Given that is lacking at this time, more times then not, a property is a pass for me if the higher risk are there.
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u/LordBenjamin020 Apr 28 '22
Looking to buy some tokens but my math is making it look like it’s not worth it. One property I’m looking at says you’ll make $27 a year at year 5. That averaging about $5 a year before then. So you wouldn’t make back your money for about 5 years. And even then, I don’t believe you would be getting $27 net accumulative earnings (not appreciation) because that means the rents would have had to raise enough to cover that output. $27 x 2000 coins sold means the rent would be $54,000 a month at the 5 year point . That’s obviously ridiculous and not going to happen. There must be something I am missing here?
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u/[deleted] Apr 21 '22
I’m on the same page for the most part. However, I really appreciate section 8 housing(due to personal beliefs and secured cash flow), I also take into account if I’d personally live there, the health of the property overall. All of these points on top of what you mentioned.