Am I Analyzing Deals Correctly?

5 Replies

I have started analyzing a bunch of SFH deals with the help of the BP calculators but almost all of the ones I have done (10+) have come out producing negative monthly cashflow. I want to make sure I am using the tool correctly and was just wondering what the BP community would recommended I allocate for vacancy, repairs and maintenance, cap ex and management fees? I have been putting in 5%, 10%, 10% and 10%. Additionally, I have done a good job finding property taxes and market rent for these properties but not as much luck with water, electric, and garbage. Are there estimates or websites I could use to get a more accurate and comprehensive analysis? Thanks!!

The calculators work. Not every property cash flows, especially if you're in the metro areas. If you're looking in Brooklyn (my hometown that I want to return to one day as well) check out this thread on property analysis:

https://www.biggerpockets.com/forums/12/topics/509736-new-york-nightmare-market?page=1#p3121712

@Gregory Flores, Jr. Thank you for that link! I just wanted to make sure I was inputting things correctly and NYC and other big cities are tough. I have been focusing my search in the Greater Atlanta region, but also keeping an eye out on parts of Brooklyn.

Originally posted by @Joe Vastola :

I have started analyzing a bunch of SFH deals with the help of the BP calculators but almost all of the ones I have done (10+) have come out producing negative monthly cashflow. I want to make sure I am using the tool correctly and was just wondering what the BP community would recommended I allocate for vacancy, repairs and maintenance, cap ex and management fees? I have been putting in 5%, 10%, 10% and 10%. Additionally, I have done a good job finding property taxes and market rent for these properties but not as much luck with water, electric, and garbage. Are there estimates or websites I could use to get a more accurate and comprehensive analysis? Thanks!!

 Perhaps account for 14% for PM as that is the national average after fees, lease ups etc. The BP calculator does not know unique location dynamics, supply and demand, redevelopment, gentrification, demographic patterns, job and population growth or lack of, schools, crime...you get the picture. Many of the most profitable locations will not pan out on the BP calculator and likely if invested in the BP calculators " bests" one could find themselves in a world of hurt down the road. It is better perhaps to use BPs calc to compare two or more like properties in the same locations. 

Good luck! 

@Joe Vastola that’s a good number for vacancy. I would get some actual numbers for the rest. I have a 3 family in Brooklyn grossing 135k a year and I wasn’t spending near those numbers in vacancy and repairs. Depends a lot on how you plan on doing it.

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