(NOOB) how do YOU calculate a properties vaule?

5 Replies

subj pretty much says it all... much appreciate any input. looking towards my first purchase...

At what price would I be able to get $200/month/unit at 100% leverage.

Originally posted by @Scott Weaner :

At what price would I be able to get $200/month/unit at 100% leverage.

 thanks for the input. that bring up another question i had, how area you getting props with%100 leverage? im having a hard time rationalizing putting 20% down of my capital to get a couple hundred in cash flow per month...

I don't think he meant he is getting 100% leverage.  He's just saying if he did, he would be looking to get $200/month per unit.  It's strictly analysis.  And everyone is different.

For me, I know exactly what the bank will give me so I use that and factor in potential rent/expenses/vacancy rate and my goal is $300/month per $100k spent.  That's purchase price, not money down.  If I buy a house for $75k, I'm expecting it to cash flow $225/month.  I'm a little lenient on it depending on other factors like if I'm paying top dollar or if I'm buying some instant equity.  If it cash flows $210/month, I may not walk away, but at $100/month, I would.  Some areas don't allow for that much cash flow but where I invest does and it's worked 9 times for me so far.

Josh here. I'm a newer buy/hold investor in the Atlanta market.

Interesting question that could be interpreted a number of ways. Two come instantly to mind:

-How do I calculate a property's market value?
Comps. Recently-sold examples from the MLS. Easily procured with the assistance of a realtor, and readily available online with a bit of searching (use multiple sources / sites to get realistic data).

-How do I calculate a property's value to me?
Much more interesting question. Best answered with a quick story: I recently bought a quad in an area that makes many local investors wrinkle their noses. When I told a seasoned investor about my acquisition, she said, "Oh wow, you're brave!". Well, the numbers on the place told a different story. I picked it up for 80K all in, including around 7K of deferred maintenance repairs. Even with management in place and payments for PITI, water, sewer, trash, and lawn care, the place nets around $850 every month. The units have a history of 95% occupancy, and tenants stay for years at a time. So I bought it, and I am thrilled that I did. Not a sexy neighborhood, not an appreciation play, just a solid income-producing property that moves me a few steps closer to my goals.

In short, I calculate a personal property 'value' based on how much closer it gets me to my goals.

Hope it helps. Cheers!

Originally posted by @J Campbell :
Originally posted by @Scott Weaner:

At what price would I be able to get $200/month/unit at 100% leverage.

 thanks for the input. that bring up another question i had, how area you getting props with%100 leverage? im having a hard time rationalizing putting 20% down of my capital to get a couple hundred in cash flow per month...

I have gotten 100% leverage by using a HELOC to fund the down payment. I will only be able to do this for a limited number of properties, though. I will still use those numbers to see how much I should pay, even if I cannot get 100% leverage.

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