Having trouble making sense of analysis numbers

20 Replies

Hey guys, 

I've been doing searches on Redfin for properties in good investment cities/areas that individuals from these forums often talk about. When time comes to run a quick analysis on the numbers, they don't make any sense. NONE of the properties are worth investing in. Am I doing something wrong?  Is Redfin not a good option, or do people usually bargain the price down in order for the numbers to make sense? 

Hi Sarkis, 

I understand your frustration, but there are definitely some good investments here in Cleveland. What kind of returns are you looking for? We specialize in helping out of state investors enter into this market by providing turnkey properties that meet their cash flow goals on SFRs. 


@Sarkis Gezalyan Got it. We're doing about 20 flips a year here. RARELY am I buying distressed properties off of the MLS. Every now and then there's a decent deal there but it can be tough. The majority of my deals come from my direct marketing to homeowners, wholesalers, or my network.

@Sarkis Gezalyan How are you doing your calculations and what are your expectations on them? I analyze deals off the MLS in Cleveland and not all of them make sense but most of them will be an easy $200 cash flow after maintenance, CApX, PM and repairs. Maybe you are looking in the wrong suburbs.

@Mitchell Litam let’s take this listing for example. I know it’s not your area, but how would you approach something like this? https://www.zillow.com/homedetails/264-N-54th-St-Mesa-AZ-85205/7672487_zpid/ Based on rentometer, I’m averaging gross income of 1750 let’s say. Would your first instinct be to offer a much lower price?

@Sarkis Gezalyan

So let me get this straight, you're investing in out-of-state quarter-million-dollar 2000ft2 4/3/2 SFR as your first play in real estate?

Have you carefully considered the exciting possibilities of index fund investing for your money?

@Sarkis Gezalyan

Not, not at all, Sarkis. It's a big first play in luxury SFR territory. Luxury SFR requires luxury property management. You might do well cutting your teeth on a smaller deal. The average net worth of the US homeowner is $195,400, 36 times greater than the average tenant, who clocks in at $5,400. I would aim lower for a first play. In my market, my first play was an $80,000 SFR, 4/1.5/3 with a tenant in place paying $1075/mo, and it was local. I bought the house from an experienced investor going through a divorce, and it was viable as-is.

With something like this -- you've got no team in place out there to deal with the kind of tenant demands you're going to get from someone who feels a personal need to pay rent on 3 bathrooms for 4 bedrooms. The best you can hope for is a property manager running this one rental for you who is willing to naively believe that you're on track to build an empire. Anyone else is going to bleed you dry with a smile, and the manager who believes in you is also going to do it...but out of stupidity.

Don't make this deal or others like it because you can't wait to be a success. If the numbers don't work, it's not time to invest.

@Sarkis Gezalyan

Sorry for the initial sarcasm. I see way too many people thinking there's an outsized demand for luxury rentals when in my experience, it's a niche market and eats the unprepared alive just as much as the opposite niche, DIY landlording with low-cost rentals in borderline urban locations, which is what I do. My go-to agent just called me up today with an offer for an 1800ft2 4/1.5/1 for $25,000 cash. I'll be able to rent it for $700/mo easily. Sounds like an incredible opportunity, right?

It's on the edge of a heroin ghetto and it's almost 100 years old. Total money pit for anyone who's paying for contractors to go in and out of there, that is, if they can actually FIND contractors who will go in and out of there. Finding an honest property manager to look after it would be the sort of experiment in futility the Nazis devised to see how thoroughly minds could be broken. I haven't even started on how I'll have to vet the tenants. This felony or that one? Four years ago or seven? And what does that tattoo REALLY mean, anyway?

@Sarkis Gezalyan You have to be more specific about what isn't working. Without knowing what your criteria is and what kind of numbers you're seeing, it's impossible to answer your question, however, if you're looking for deals, MLS isn't the place you're going to find them. Indianapolis is a a strong cash flow market but it's also very hot now. It's not likely you're going to be able to bargain the price down

@Sarkis Gezalyan , I am also new and didn't see this on here so...

See if you can find a local investor group that you can network with in your area. That may just get conversations started with people that do invest out of state too. One of the biggest comments I have seen on BP and that I've started using in my 2 months since I started is the networking part. I've been to the local meet up and have a new network of 5-6 people who share deals, advice, etc. Maybe from that you can search BP for people in your new target area. I've made a few good connections in some geographic areas I have interest in by reviewing profiles. If you decide on the southern Indiana, Northern Kentucky area I'd be glad to connect. Good luck.