How to Easily Analyze Rental Properties Using the Four Square Method

by | BiggerPockets.com

I know you want to build passive income and wealth through rental properties.

Who doesn’t?

There is a MAJOR problem, though, that stops most people from achieving this goal: Most don’t know how to analyze deals correctly!

Related: How to Analyze a Rental Property to Know if it Will ACTUALLY Produce Income

(Of course, if you are a BiggerPockets Pro member, you get unlimited access to the Property Analysis Calculators on BiggerPockets. But even with access to those amazing tools, you need to know how to do the numbers by hand.)

Therefore, today I want to introduce a very simple, easy-to-understand method for analyzing rental properties for the two numbers I care most about:

  1. Cash Flow
  2. Cash-on-Cash Return

In the following video, I dive deep into the analysis on a property and explain just how I was able to estimate my future cash flow and cash-on-cash return in just a few minutes — and how you can (and should) do the same.

Here’s the video. Be sure to take some time today to really dive into this. It just might give you the tools you need to build that financial freedom you crave.

Related: How to Analyze a Potential Real Estate Market for Crime & Safety

Enjoy!

Bonus Download

To help you master the art of The Four Square Method, I’ve even created an easy-to-follow worksheet that you can download right now and use for your next deal analysis. Trust me — you are going to LOVE this thing! Click here to download!

foursquare-method

P.S.

If you want to get better at analyzing deals, don’t forget — each week I host a LIVE and FREE webinar on BiggerPockets, where we dive deep into the analysis on a real life property! Join me for next week’s webinar!

Any questions about analyzing deals with this method?

Let me know your questions and comments below!

About Author

Brandon Turner

Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He began buying rental properties and flipping houses at age 21, discovering he didn’t need to work 40 years at a corporate job to have “the good life.” Today, with nearly 100 rental units and dozens of rehabs under his belt, he continues to invest in real estate while also showing others the power, and impact, of financial freedom. His writings have been featured on Forbes.com, Entrepreneur.com, FoxNews.com, Money Magazine, and numerous other publications across the web and in print media. He is the author of The Book on Investing in Real Estate with No (and Low) Money Down, The Book on Rental Property Investing, and co-author of The Book on Managing Rental Properties, which he wrote alongside his wife, Heather, and How to Invest in Real Estate, which he wrote alongside Joshua Dorkin. A life-long adventurer, Brandon (along with Heather and daughter Rosie) splits his time between his home in Washington State and various destinations around the globe.

10 Comments

  1. sebastian bedoya

    awesome post like always Brandon. Right now I am in that phase of learning to analyze deals to see if its worth pursuing. One question I have. When we use the calculator, do we use the asking price or the price we’d be willing to offer for the property?

  2. Tyler Chase

    @Brandon, quick question. Do we use the current rent (if rented), or what we plan on renting it for (if not currently rented)?

    Also, what are your thoughts on purchasing multi-family properties that are not currently rented vs already rented properties?

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