Review my analysis report

[Bryan Caldwell]

I'm working on my deal analysis as I'm very new to real estate and BP pro. I'm wondering if any of you who are familiar with these calculator reports would look over my work and help me understand where I'm off and how I can improve. I'm not in a place to act on these deals (assuming they turn out to be deals!) so if I bring you a great deal it's all yours to act on if you'd like. I will not expect (or turn down, ha!) anything from any income you get off of the deal. I'm in this to up my analysis game only right now.

I apologize if this isn't the right place to post this. I'm still trying to figure out the forums.

[Tim Herman]

@Bryan Caldwell There are 3 types of expenses associated with rental properties that need to be included in analysing properties. Fixed: mortgage, Periodic Taxes and Insurance. Variable: vacancy, repairs, capex and Property Management. You need to estimate the variable cost as a monthly cost to determine if the property cash flows. The variable costs are hardest to estimate. Vacancy can be determined by calling around various property managers. For analysis purpose I use 8% of gross rent. That's the equivalent of 1 month vacant out of 12. Repairs. For myself I use 5% of gross rents. This is hard to quantify as you don't know how many service calls you will have, I like to have a minimum of $500 per year. Capex the most underestimated expense beginners make. They think oh, it has a new roof and new floors, I am only going to use 3%. Well the new floors and new roof are going to wear out. Assume a roof cost 5k. Life span 25 years. 5k/25/12 months in a year=$17 per month. Floors, in my area it is $3 to remove and install new lvp. A moderate lvp is $3 sf so all total $6 sf. Assuming 1200 sf of flooring and a 10 year life span. $7200/10/12 months in year=$60 per month. Capex budget still has to include appliances and hot water heater 12 year life span, hvac 20 year life span, bath and kitchen remodel 15-20 year life span, etc. I use a minimum of 10%. When you get below a $1000 per month rental your percentages will need to increase.