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The Das Group

@thedasgroup

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🏡 Real Estate Advisory
📈 Strategy & mentorship for building long-term wealth
🏗️ Acquire · Renovate · Develop · Lease
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The Fed gets the headlines. The bond market prices your mortgage. Knowing the difference changes how you invest. by @thedasgroup

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7 days ago

A government bond is outperforming a Columbus rental.

No tenants. No maintenance. No vacancy.

And that’s a problem for real estate valuations.

We recently underwrote a three-bedroom rental in East Columbus, a market investors often favor for its relatively attractive rent-to-price ratios.

The numbers:

Purchase price: $262,000
Monthly rent: $1,895
Annual NOI: $12,600
Unlevered yield: 4.81%

Now consider a 10-year Treasury yielding 5.34%.

That’s a 53-basis-point disadvantage before accounting for the additional risk of owning real estate.

And that spread tells us something important.

Institutional investors evaluate acquisitions against a risk-free benchmark. A Treasury provides the reference return. Real estate must justify its premium through income, appreciation potential, or both.

Here, the income premium is negative.

Financing compounds the problem.

Borrow near 7.5% to acquire an asset yielding 4.81%, and you’ve introduced negative leverage: debt that dilutes returns rather than amplifying them.

This is how the bond market quietly reprices property.

Not necessarily through a crash. Through higher required returns, lower acceptable purchase prices, and increasingly selective capital.

For your next acquisition:

1️⃣ Calculate the unlevered yield: annual NOI divided by purchase price.

2️⃣ Compare it with the current 10-year Treasury yield. Quantify the spread in basis points.

3️⃣ Set a required risk premium. Then reverse-engineer the maximum purchase price your NOI can support.

4️⃣ Stress-test financing separately. A property can generate positive NOI and still produce unattractive leveraged returns.

And remember: the spread can narrow if Treasury yields fall, NOI rises, or property prices adjust.

A property’s asking price tells you what the seller wants. Its yield tells you what the capital markets will tolerate.

#RealEstateInvesting #ColumbusRealEstate #RealEstateFinance #InvestmentProperty #CapitalMarkets by @thedasgroup

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8 days ago

Your mortgage has a price list.

Most borrowers never see it.

Fannie Mae publishes an LLPA matrix: Loan-Level Price Adjustments. In plain English, it’s a grid of fees attached to conventional mortgages based on things like credit score, loan-to-value and occupancy.

And the grid has some very expensive edges.

The price doesn’t change smoothly. It moves in tiers.

That means 739 and 740 can be very different numbers.

Crossing that single point can reduce the modeled LLPA by roughly $1,313 on a $350,000 loan.

Now turn another dial.

A 780+ borrower at 75–80% LTV carries a 0.375% credit-based adjustment. Move to 70–75% LTV, roughly 25% down, and that adjustment falls to 0%.

Investors get another wrinkle.

At 75–80% LTV, an investment property carries an additional 3.375% adjustment, roughly $11,800 on a $350,000 loan before the applicable credit adjustment is stacked on top.

And then there’s the provision worth knowing: qualifying HomeReady loans and certain income-eligible first-time homebuyers can receive LLPA waivers.

So before your next conventional mortgage:

1️⃣ Pull your scores before applying. Know your pricing tier and how close you are to the next threshold.

2️⃣ Ask your lender to price multiple LTVs. Don’t assume 20% down is economically optimal.

3️⃣ If it’s a rental, underwrite financing costs before calculating returns. Occupancy changes the economics.

4️⃣ First-time buyer? Ask: “Do I qualify for an LLPA waiver?”

The rate your lender quotes matters.

Understanding the machinery that produced it matters more.

#RealEstateInvesting #Mortgage #RealEstate #PropertyInvesting #RealEstateFinance by @thedasgroup

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9 days ago

Before we considered buying this house, we modeled selling it.

We’re evaluating a real North Phoenix home at $437,000. With 20% down and estimated buyer closing costs, roughly $100,500 goes into the acquisition.

But acquisition is only half the underwriting.

What happens if our intended hold is three years? Five? Seven?

At today’s price, an 8% selling-cost assumption is roughly $35,000. Meanwhile, at the modeled 7.28% mortgage rate, only about $19,600 of principal is paid down after five years.

That creates a substantial hurdle before appreciation simply gets our original cash back.

So we stress-tested the exit.

3% annual appreciation → ~3 years to cash break-even

1.1% → ~6 years

0% → ~11 years

At 1.1%, a sale after three years leaves us approximately $23,300 short of recovering the cash invested.

That changes how we view the opportunity.

At $437,000, we would not underwrite this as a short-hold acquisition.

Either the basis needs to improve, the hold needs to extend, or another source of return needs to compensate us for that early transaction-cost burden.

Try this on your next acquisition: model the sale before submitting the offer. Run several appreciation scenarios, calculate selling costs against the projected sale price, and identify the first year your original cash comes back.

Then compare that year with your intended disposition window.

A good property can still be a bad acquisition at the wrong basis and the wrong hold period.

#RealEstateInvesting #PhoenixRealEstate #ArizonaRealEstate #RealEstateUnderwriting #PropertyInvestment by @thedasgroup

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11 days ago

The rent didn’t kill this deal. The appreciation hurdle did.

This North Phoenix rental is asking $450,000. At roughly $2,300 a month in market rent, the full underwriting pencils to about -$892/month in cash flow.

That doesn’t automatically make it a bad investment.

But negative cash flow has to be paid for somewhere.

In this case, that somewhere is appreciation.

The property needs roughly 3.6% annual appreciation for five years just to break even.

Now the thesis is measurable.

So let’s measure it.

A North Phoenix property shouldn’t be underwritten against a Phoenix-wide headline. So we went down to 85032.

The evidence is mixed:

Zillow Home Value Index: +0.7% YoY
Redfin median sale price: +4.5% YoY
Zillow one-year forecast: +0.6%

Different methodologies. Different signals. None gives us enough conviction to make 3.6% annual appreciation the assumption that saves the acquisition.

Run the sensitivities:

1% appreciation → ≈ $55,000 loss over five years.
3% → ≈ $13,000 loss.
5% → finally positive, but only about a 3.7% modeled annual return.

For us, that isn’t enough margin for error. So we’re passing on this one.

For your next negative-cash-flow acquisition:

1️⃣ Calculate the negative carry over your planned hold.

2️⃣ Solve for the appreciation rate required to hit your minimum acceptable return.

3️⃣ Pull appreciation data from the smallest defensible geography: ZIP, neighborhood or subdivision when transaction volume supports it.

4️⃣ Compare multiple measures. Closed-sale prices, home-value indexes, inventory, price reductions and forward supply answer different questions.

5️⃣ Stress-test below your base case. If modest underperformance destroys the return, price that risk before you buy.

Negative cash flow isn’t automatically a bad investment.

But if appreciation has to rescue the deal, appreciation is the bet.

Know the odds before you place it.

#RealEstateInvesting #PhoenixRealEstate #RentalProperty #RealEstateStrategy by @thedasgroup

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13 days ago

Rates moved.

So did our offer.

We’re underwriting a North Phoenix property currently listed at $450,000. A month ago, the financing looked materially different than it does today.

At 6.71% a month ago, a $360,000 loan carried roughly $2,325/month in principal and interest.

At 7.28% today?

$2,463.

That’s $138/month of purchasing power erased in four weeks without the house changing at all.

Go back to the 52-week low of 5.98% and the difference is roughly $309/month.

We’re not abandoning the deal.

We’re repricing it.

To bring the payment back to where it was a month ago, our modeled purchase-price ceiling falls to roughly $424,800.

That’s about $25,200 below asking.

Aggressive? Yes.

Detached from the market? No.

In August, 76.7% of Phoenix-area homes sold below their original asking price. Prices were up just 0.7% year over year, while pending sales fell 4.7%.

That matters because interest rates shouldn’t be analyzed separately from negotiating leverage.

If you’re underwriting a property this week, try this before changing your return targets:

1️⃣ Run the deal at your actual quoted rate.

2️⃣ Calculate the maximum loan amount that preserves your target payment, DSCR or cash flow.

3️⃣ Convert that loan amount back into a maximum purchase price.

4️⃣ Compare the required discount with local sale-to-list ratios, inventory, days on market and recent comps.

5️⃣ Negotiate from that number, not from the seller’s asking price.

The seller priced the property.

The capital markets priced the debt.

Our job is to price the risk.

The deal didn’t die at 7.28%.

It just got a new price.

#RealEstateInvesting #PhoenixRealEstate #RealEstateStrategy #PropertyInvesting taken in North Phoenix by @thedasgroup

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14 days ago

A national housing headline is a terrible place to stop your research.

Let’s look at an example.

The headline: In August, 59.5% of homes sold below their original asking price.

Seems like a useful statistic. Until you ask: where?

West Palm Beach and Austin look remarkably similar on one measure:

85% of West Palm Beach homes sold below asking. In Austin, it was 82.3%.

But look at prices year over year.

West Palm Beach: +8.6%.

Austin: -6.3%, the steepest decline among the 50 largest U.S. metros.

Nearly the same negotiation signal. Completely opposite price movement.

That’s the trap.

In West Palm Beach, luxury sales distort the picture. Expensive homes can sell below ambitious asking prices while a heavier mix of luxury transactions pushes the metro’s median sale price higher.

Austin has a different equation. Years of construction expanded supply, giving buyers considerably more inventory to negotiate against.

“Buyers have leverage” can be true nationally and nearly useless at a specific negotiating table.

For investors, market selection shapes acquisition basis, rent growth, vacancy, appreciation and exit liquidity.

Before underwriting a market, build a three-part screen:

1️⃣ PRICE
Track 12-month median sale-price growth.

2️⃣ NEGOTIATION
Track below-ask sales, sale-to-list ratio and seller concessions.

3️⃣ SUPPLY
Track inventory, months of supply and days on market against historical levels.

Then cross the signals.

Falling prices + rising supply + more below-ask sales tells a very different story than rising prices + constrained supply + frequent below-ask sales.

Finally, repeat the analysis for the neighborhood and price band you actually intend to buy. Metro averages can hide entirely different submarkets.

Don’t deploy capital based on a national headline. Build the market scorecard first.

National headlines describe the market. Crosscurrents reveal where the opportunity actually is.

#RealEstateInvesting #RealEstateStrategy #RealEstateInvestor #HousingMarket by @thedasgroup

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16 days ago

Most buyers negotiate the number everyone can see: the list price.

The better negotiation may be hiding somewhere else in the offer.

In August, 59.5% of homes sold below their original asking price. Seller concessions appeared in 44.7% of transactions. Roughly 15% of buyers got both a price reduction and a concession.

That doesn’t make this a distressed market (the average home still sold for 98.5% of list).

But it does make this a market where structure matters.

Consider a hypothetical $500,000 purchase with 20% down.

Negotiate $10,000 off the price and your loan falls by $8,000.

At 7.03%, that saves roughly $53 per month.

Keep the $500,000 price and negotiate that same $10,000 toward a permanent rate buydown. If it buys approximately half a point, the monthly savings are roughly $133.

Same $10,000 of seller economics.

About 2.5× the monthly impact.

But don’t automatically ask for the buydown.

Before submitting an offer, have your lender price the same seller dollars three ways:

1️⃣ Price reduction: What does it actually save monthly?

2️⃣ Permanent rate buydown: What rate can the concession actually purchase, and what is the monthly savings?

3️⃣ Closing-cost credit: How much cash stays in your account at closing?

Then calculate the breakeven period on the buydown.

If the buydown saves $133/month and costs $10,000, that’s roughly 75 months of payments to recover $10,000 through monthly savings. If your strategy assumes refinancing well before then, that should materially affect which concession you pursue.

Also confirm your loan program’s seller-concession limits before writing the offer. Investment-property limits can differ, and buydown pricing varies by lender and borrower.

Now you have something much more useful than “ask for $10K off.”

You’ll walk into the negotiation knowing exactly what $10,000 of seller flexibility is worth to your specific deal.

Don’t just negotiate the price. Negotiate the structure that serves the deal.

#RealEstateInvesting #RealEstateStrategy #RealEstateInvestor #Mortgage #PropertyInvesting by @thedasgroup

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18 days ago

“The rent will catch up.”

Maybe.

But hope is not an underwriting assumption.

National multifamily rent growth has been accelerating again. Annual growth reached 2.2% in August, up from 1.5% in June. August’s month-over-month pace annualized to an even stronger 4.2%.

For existing owners, that’s welcome news.

For buyers trying to make today’s financing pencil, the magnitude matters more than the direction.

Take an illustrative property renting for $2,300/month.

At 2.2% annual growth, another year gets you roughly $51 more per month.

Even if rents sustained August’s much faster 4.2% annualized pace for a full year, you’d gain about $97/month.

Now put a $225,000 mortgage against the property.

Moving from 6.30% to 7.03% adds roughly $109/month to principal and interest.

One move happens immediately.

The other has to be earned over time.

That timing mismatch is where otherwise disciplined underwriting can quietly turn speculative.

A deal comes up slightly short today, so the spreadsheet gets pushed forward:

Rent grows 3% next year.
Then another 3%.
Expenses behave.
Occupancy holds.
No major repair hits.

Suddenly the projected deal looks excellent.

But the investor didn’t discover a better property.

They discovered Excel.

Rent growth belongs in a forward model. It just shouldn’t be doing the job of making an acquisition economically viable on Day 1.

There are genuinely encouraging signals here. Rent growth is firming. Fewer major metros are posting annual declines. And on-time payments at independently operated properties improved to 83.2% in September.

Income conditions are getting better.

Just slowly.

The disciplined approach is to underwrite the rent you can support today, then let future growth improve a deal that already works.

Because appreciation can surprise you. Rent growth can outperform.

Neither should have to rescue the acquisition.

#RealEstateInvesting #RentalProperty #Multifamily #RealEstateInvestor #CashFlow by @thedasgroup

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18 days ago

A refinance can put cash in your pocket while quietly taking something else away:

time.

Mortgages are front-loaded with interest. Every time you replace an aging loan with a fresh 30-year mortgage, you move yourself back toward the expensive end of the amortization schedule.

Consider a hypothetical $400,000 loan at 7.03%.

Monthly principal and interest: about $2,669.

On the first payment, roughly $2,343 goes to interest.

Just $326 goes to principal.

And the crossover takes far longer than most borrowers realize. At that rate, the principal portion of the payment doesn’t exceed the interest portion until roughly month 243.

A little past 20 years.

Now introduce refinancing.

Assume the rate never changes and an investor refinances the remaining balance into a new 30-year loan every five years.

After 15 years:

Keep the original mortgage → roughly $103,600 of principal repaid.

Refinance every five years → roughly $66,000.

That’s approximately $37,600 less equity built through amortization alone, before counting refinance closing costs.

Same starting debt. Same assumed rate.

Different relationship with the amortization clock.

None of this makes refinancing inherently good or bad.

A refinance can release trapped equity, improve liquidity, fund another acquisition or restructure debt. Those benefits can easily justify slower principal reduction.

But equity extracted and equity accumulated are not the same thing.

That distinction matters for investors who refinance habitually. A lower payment isn’t the only variable worth optimizing, and neither is the amount of cash coming back at closing.

Before refinancing, model what happens to both sides of the balance sheet.

Sometimes resetting the clock creates more wealth elsewhere.

Sometimes you’re just resetting the clock.

#RealEstateInvesting #Mortgage #Refinance #RealEstateInvestor #WealthStrategy by @thedasgroup

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19 days ago

BRRRR math can look incredible right up until the bank gets involved.

Buy at $180K.
Put $45K into the rehab.
Add roughly $15K in closing and holding costs.

You’re $240K all-in.

The property stabilizes at $2,300/month and appraises for $300K.

At 75% LTV, the refinance produces a $225K loan.

You started with $240K in the deal. You pulled $225K back out.

Only $15K remains invested.

On paper, that’s the BRRRR everyone wants.

Except capital recovery and investment performance are two different calculations.

Run this deal with a 3.5% refinance and our illustrative assumptions produce roughly +$315/month in cash flow.

Move the refinance rate to 7.5%?

–$248/month.

Nothing happened to the house.

The rehab didn’t get worse.
The appraisal didn’t fall.
The tenant didn’t stop paying.
The rent didn’t change.

The capital simply became more expensive.

That’s what makes BRRRR underwriting fundamentally different in a higher-rate environment.

The refinance isn’t an administrative step at the end of the deal. It’s the transaction that determines whether your renovated property becomes a cash-flowing asset or an obligation you subsidize every month.

And LTV alone won’t answer that question.

Investors need to work backward from the actual exit financing available to them: rate, leverage, DSCR, seasoning requirements, lender fees and reserves.

Then solve for the maximum acquisition and rehab basis that still works.

Not the other way around.

A deal can return 94% of your original capital and still leave you feeding it cash every month.

That’s the part the BRRRR highlight reels tend to leave out.

Getting your money back is not the same as making money. by @thedasgroup

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21 days ago

A 1031 exchange isn’t a tax break.

It’s a decision to keep the IRS waiting.

Sell an appreciated investment property outright and years of embedded gain can become taxable in one transaction. Capital gains. Depreciation recapture. Potential NIIT.

Exchange correctly, and that tax event gets pushed forward instead.

Consider a property sold for $3 million, with a $1 million adjusted basis and $400,000 of accumulated depreciation.

Depending on the investor’s circumstances, the federal tax exposure can approach half a million dollars.

A properly structured 1031 keeps that capital deployed.

That matters.

Capital retained today can acquire more real estate, generate more income, create additional depreciation deductions and participate in another appreciation cycle.

That’s why sophisticated investors often treat the 1031 less like a tax maneuver and more like capital allocation.

The mechanics, however, are unforgiving.

45 days to identify replacement property.
180 days to complete the exchange.

The proceeds generally remain with a qualified intermediary. Take constructive receipt of the money and the exchange can fail.

And “like-kind” is much broader than it sounds. An apartment building doesn’t need to become another apartment building. Qualifying investment real estate can generally be exchanged into other qualifying investment or business-use real estate.

Then the strategy gets considerably more interesting.

Property 1 becomes Property 2.

Property 2 becomes Property 3.

Each exchange carries the embedded gain forward instead of recognizing it.

Continue exchanging, hold the final property until death, and current federal law generally provides heirs with a basis adjustment to fair market value.

Decades of deferred capital gain and depreciation recapture can potentially disappear without ever being recognized by the original investor.

Hence the slightly morbid industry shorthand:
Swap till you drop.

The real power of a 1031 isn’t simply deferring tax. It’s keeping capital compounding while you control when, or potentially whether, that tax event arrives. by @thedasgroup

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22 days ago