I have been reading books and exploring Biggerpockets for about a year now and am ready to find, analyze, and purchase my first deal. I would like to purchase a 2 or 3 unit in Utah County for some passive income. I've been running properties through the Biggerpockets Rental Property Calculator for practice and feel like I am getting a pretty firm understanding of what makes a good deal.
I am wondering if anyone on the forums knows where I can find (if it even exists) rental property analysis homework? Here's what I'm picturing: scenarios that I can study, run through the Biggerpockets Rental Property Calculator, and critically analyze. Ideally I would be able to check my work against an "answer key" to determine if I performed the analysis correctly. I realize that there is not one right answer for any given scenario but I would like to know if I am omitting anything important in my analyses.
If you know where to find analysis homework, or if you would even be willing to provide some homework and work with me through some analyses, I would really appreciate it. Thank you!
@Matthew Miles I am not entirely sure of your question but in my opinion the BP calculators have everything you need built in. Just be honest and conservative in the numbers you enter and see the results that come out. If the results look good then you can probably make that investment with some piece of mind.
Any investment you decide to do will have a degree of risk but if you are conservative with your numbers and plan correctly your homework is done.
@Eric Gardiner Have you been seeing a lot of good deals in Utah lately? I have found it really tough to find something that meets the 1% rule unless you look at the sketchiest neighborhoods possible where there is increased risk of issues.
@Scott Bowles the deals I am seeing are thin. I don't see 1% deals ever. I owned a rental in downtown Salt Lake City that was a 1%er but it was in a bad building and so I sold it last January in order to invest in a multi unit.
Me and an my partner analyze deals daily. We are looking for multi unit properties and I think we have two that will cash flow. I prioritize cash flow assuming 10% down and typical expenses.
Ok glad to hear I am not missing out, I have a duplex with decent cash flow getting close to 10% cap of what I paid and we just closed on something around a 7-8.5% cap rate. That was the best I had seen after 6 months of looking by several percentage points.
People are always posting analysis questions on here. Take the numbers they give you and run the analysis how you would analyze the deal. Check your numbers to what others comment. I would check the "FilePlace" for excel files that do this. Create or tweak one to fit your criteria. I do this all the time for practice.
@Eric Gardiner Thanks for your input. I agree that the BP calculators are pretty robust and that being conservative is the smart move. Thanks for that reinforcement; it gives me confidence in the practice I've been getting.
@Jim Adrian I'll keep my eye out for analysis questions in the forums. Thanks for the FilePlace tip too, I'll check that out as well.
What type of numbers are most people using in Utah for their analysis? Specifically cap ex, Managment, vacancy, maint and repairs etc.? I haven't gotten to the point that I'm analyzing deals but am getting close. I was thinking of 7,10,7, and 7 respectively. I'm assuming a buy and hold. What's are typical ROI that investors are seeing with 20% down?
@Andrew Morales these are the numbers I use. They don’t really come from anywhere except what I am comfortable with.
Maint. & Exp.: 5%
Obviously management is dictated by what your management company charges. Vacancy rate in the SL Valley and Utah County are pretty low right now. That can be adjusted with the market.
Percentages will vary based on rent. You also need to backcheck the numbers to cover what you need. Ex: rent at $500 vs $1500 you will need a different vacancy rate to cover all your holding expenses. Like @Brandon Norlund stated with his numbers are a good starting point. I run with 6% Vac, 9% PM (self), 10% cap ex and 10% repair.