OK, y'all. Are you new? If so - pay attention... I got a PM today from a very nice guy. Very well-spoken, seemingly intelligent, and well educated. He introduced himself, and congratulated me with a job well-done on Cardone's show. And then he proceeded to tell me about a multiplex he was considering. He said that the price was too high, and he knew it. But, he was going to be able to achieve very favorable owner-financing terms, with low down-payment, 30-year am, and low interest rate. He then invited me to view a link, which turned out to be a PDF of Brandon Turner's BP Calculator, and asked for my opinion... You should know - I answer each and every message, email, and telephone call; specifically when approached with due consideration, as in this case. I proceeded to open the PDF, and was impressed! I've never actually used the calculator before. I've heard Brandon sell it as "sexy" on webinars before, but I'm old and got no energy for "sexy"... So - I was impressed with all of the color and nice graphics... And then I looked at the top line numbers: Income: $7,975Expenses: $7,560 Cash Flow: $414 This is a 10+ unit, by the way. The proposed cost was north of $650k. Required down-payment was around $30,000... WOW - anyone else see a problem with this? I've often said that it's about as difficult to buy RE as it is to fall out of a tree. Well - this dude just fell out of a flippin tree...haha At least he was smart enough to allow a tree branch (me) smack him over the top of his head. Perhaps now he'll begin to look at things a bit differently.. But, there is another interesting piece to be noted here. How can someone look at those numbers inside a colorful sexy PDF and see absolutely nothing? And - should someone have access to a tool such as this prior to attaining a level of fluency to be able to interpret what he is seeing? This type of use of calculators demotes them to a stat gimmick. The tool is no use until and unless the user knows enough to be able to use it. So - should newbies have access to calculators? Is it really a benefit. Or, would it be better, if we really want to teach them how to do this math, to sit them down in front of a spreadsheet and really teach them how this works...perhaps even in a webinar? Thoughts?

Going forward, we will require any member who wants access to our toolset on BP to prove that they have taken a course from an expert guru, trainer, or other individual selling a course on real estate investing. It was wrong of us to let anyone use our calculators without making sure they were approved by the proper experts. Sorry everyone.

The calculators are just a tool. A spreadsheet is not going to be any better at telling someone that $400 a month in cash flow on a 10-plex is a bad idea. The only way they learn that is by learning it, which ... correct me if I'm wrong... is what 99% of BiggerPockets is?

Ben - Your goal isn't to get new investors to see things in the right light -- your goal is to create a thread that creates controversy and to promote yourself and your 'university.' You've succeeded. Congrats. Claiming that we are out to do anything other than help new investors is pure hyperbole and you of all people know it. I'm done with all this nonsense -- have a nice weekend.

Well, @Ben Leybovich , you miss my point, as I somehow assumed you would. Obviously, I need to understand the numbers. Do I need to be an expert? No. Can I still be successful in real estate? Yes. Let me ask you this? Do you do the rehab work on the properties you purchase? I do. Have you ever hired someone to do remodeling or repairs that you don't have the skill or time to complete? I assume you have, and isn't that part of the game in that you avail yourself of skilled professional people to assist you in your business? Likewise, I will never be a financial genius, but I do know how to delegate and utilize resources to my advantage. I realize that you are a numbers guy and very successful at it, but I don't think you should sell us short, so to speak, those of us that come from different backgrounds and thinking who will never be as expert as yourself. Not a shortcut, simply a fact.

Finally, a post that exposes the potential dangers of "free tools/stuff" with no or little guidance. I have to agree with @Ben Leybovich that these types of tools should be taught first and given out second. Without doing so could create a false sense of security and Real Estate is more than just a few numbers on a spreadsheet or some fancy acronyms like NOI, GOI, COC, NPV, IRR, ROI, EGI, OER, etc. Spreadsheets are no different then books in my opinion. Yes, both may contain valuable information but the timing of said information may not be right for the individual using or reading the information. You can read a book, "feel" like you know what was being addressed but then do it all wrong, if at all, in the end. You can plug some numbers into a spreadsheet and read the results but are the numbers accurate to begin with (crap in = crap out) and do you actually know what each number or field represents in the first place? You can listen to a podcast and even take notes on the information, but is that going to be enough? No one can cover everything on a single webinar, podcast or a book regarding any one strategy as the moving parts, and required baseline knowledge, is sometimes over looked and furthermore could be assumed that one would have had that base knowledge before reading, watching or listening to the material offered. Who is there to guide you to what you may have missed (information wise - like pre-requisites) or where you need to go next? As I have seen through many posts on here and elsewhere, some people should not be doing what they are attempting to do because they are not ready to do so. Yet with everyone giving their 2 cents, and I too am guilty of that, sometimes they never learn properly. People give them links to other posts to read..but do they read them? People suggest a book...but who holds them accountable to read it? People suggest a spreadsheet...but is that same person following up with them to determine they know how to use the spreadsheet? People suggest a podcast or webinar and then give guidance surrounded around that podcast or webinar...but who is there to make sure that person views the material related to the suggestion or opinion offered? I see and use Forums like this, and others, as an opportunity to collaborate with and expand upon a pre-existing formal knowledge of the Industry or strategy...not as a starting point into an industry. I tend to "chime in" on topics I am educated in and experienced with...not just throw out some opinions based on a Google search, a book I read or an article I looked over and so forth. I read posts to broaden my knowledge which affords me the opportunity to determine if the information is in the "ball park" to begin with because I already have some baseline understanding and am simply looking for a little nugget to make it all click to me. That, in my opinion, is what makes BP valuable (at least to me)...the networking of the educated and experienced individuals on the platform. But when you have no idea and come to a forum looking to start your journey, that's where I think the issues could creep in. It would take someone months if not years to go over all of the posts/podcasts, then try to decipher what is good info and what is not so good info through even more off-line research and by the time it's all said and done may only end up with pieces to a large puzzle sitting out on a dining room table. There is a reason that School Kids are taught by people, in a structured format with curriculum objectives, held accountable for assignments and not simply put into a classroom with podcasts playing, books on a shelf and spreadsheets on the desk and told.."Good Luck!" The Human in us desires a Coach, Teacher, Mentor, Partner or Instructor to validate the information being received within the material, to be able to then bounce the information off of others with related knowledge (BP can assist with this aspect for sure) and finally to be held accountable to turn that information into action which should result in positive growth (and even higher income/profits as related to a career or business venture). Now I know, everyone can see or not see value in investing money to obtain a foundation or even an advanced knowledge taught by practicing professional instructors in the area related to the information sought, but why don't we complain about those same investments into an Accredited College for a paper degree which is suppose to have you prepared for the "Real World" experiences that come afterwards and sometimes fall short? The relation is no different...you go to school to get that foundation education and then it's up to you to expand upon your knowledge with additional research and resources and ultimately take some form of action. Educational Systems that have a clear learning path of instruction (curriculum per-say) and cover, without bias or prejudice, a variety of aspects within the Industry should be embraced and not bashed as I have seen in forums across the spectrum IMHO. Webinars, Forums, Books, Podcasts and Spreadsheets all have their place in the knowledge arena, as when you stop looking for knowledge you are pretty much done, yet I do question the timing of each in an individual’s learning curve. Now I know there are individuals that don't believe Real Estate can be a risky business, and I tend to strongly disagree with those individuals, but in the end...the more you know, the more you allow yourself to grow and the more tools you have available to you when the time is right...the better off you will be in anything in the long run, not just Real Estate./ Happy Learning!

The saying with data is Garbage in - garbage out. If the numbers are lousy if you use pencil and paper or a tool with nice graphics $414 is $414. It doesn't change the numbers. I don't think a new person is evaluating this different because the spreadsheet is nicer, they just don't get that the $414 is not going to compensate them for their effort. What is sometimes lost to people is how much they are earning for the time they put into their buy and hold. It is only when you get hands on or talk to other people that you get a handle on what your effort is for that profit margin. What isn't in a spreadsheet is how many hours each tenant costs you. Spreadsheets are tools , one of many people should be using. If someone is swayed by the layout even when the numbers coming out aren't so great well that is where they are at in their learning curve. Contacting other investors to get a second opinion is another tool people use to see if they are on track with I think is where this investor was going. So I don' t think calculators should be restricted. Everyone is entitled to make their own mistakes using whatever tools they want to. It is one tool on BP there are so many others.

I think there is more context required here. It's one thing to dump on a calculator, but perhaps this is a live in, long term flip/refi, whereby as long as it breaks even currently, the bottom line should get better and better as one improves each unit. Not to make excuses, it does seem like a skinny deal, but to imply the person is dumb for considering it, I'm not sure I can buy that. Also, I think you may have answered your own question whether they should have calculators. If in fact, this person refrains from a bad deal by working through inputting the details and then asking for an opinion on said calculator's output, I think we can see value in their existence, especially for "newbies".

Should Newbies Have Access to Calculators?

Triston Murray

Investor · Chicago, IL · Member since 2014 · 41 posts · 11 votes

11y

I don't think there's anything wrong with an investor using a calculator to quickly gauge a potential deal, especially if he/she has to evaluate many deals at once. But the person should have an understanding of how the system calculates its figures.

There IS a danger of a newbie like me using a pre made template calculator to make a decision. For me the work around has been excel/ google sheets, because I develop all of my spreadsheets from scratch I have a complete understanding of the underlying calculations and I know they are tailored to my purposes. However the potential does exist for me to omit certain important aspects accidentally. So I still must be careful and triple check everything.

So basically IMHO newbs can use a calculator, but should understand it... should never base any final decision on it... and always perform due diligence no matter what the calculator says/. Take an excel class if your not familiar, excel will change your decision making life forever.

1 Reply

Charles Worth

Investor · New York City, NY · Member since 2015 · 808 posts · 417 votes

11y

@Ben Leybovich

Your cynicism always cracks me up. In this case though I think it is kind of like a lot of the medicine we use in the healthcare system in that its true it can be bad for you but the alternatives are far worse. In this case I think most newbies, unless they have a background in running numbers or doing analysis, will probably either download some type of similar analysis on the web, listen to people they probably should not be listening to or worse relying on gurus and common knowledge (real estate is always a good investments, $20K houses can’t be worthless, etc.). As such, a calculator like this is a great tool to those who learn all the other things that matter and what the numbers actually mean. There will always be those that don’t but they likely would have found other paths to the same place by relying on something else.

For me personally I am a newbie but practically live in excel doing analytics as a banker so I have not really used the calculators but I have seen similar ones sent to me or PDFs and I too see how it can be overwhelming and find it easier to find a very simple analysis in excel that I really have to think about but to each his own.

@Brandon Turner there are a lot of ways to build in checks and balances to a model, and if not there already this might be good to have in there. Feel free to PM me if you want.

1 Reply

Mark Masiel

Lima, Lima · Member since 2014 · 59 posts · 11 votes

11y

I wonder if everyone on this post has taken a real good look at the spreadsheet. I mean it is brutal and unrelenting in determining cash flow. I think that's a good thing for a newbie. These aren't just acronyms thrown out, it explains what you are taking out and why.

@Account Closed for supplying these tools and this forum.

And by the way, 400 dollars a month on a 30,000 investment is worth looking at. There are risks in everything. Maybe it doesn't work here (we know nothing except a couple of figures thrown out) but 30,000 can bring in lots less than that in other investment vehicles.

Should Newbies Have Access to Calculators?

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