Where can I find all formulas for Real Estate Investment

Question

Where can I find all formulas for Real Estate Investments properties, Everyone seem to have there own system going, I would like to know what works for you? I have seen various formulas on here.

Account Closed · Answer

Jordan
Here is the very best explanation that you can find of income ratios     [REMOVED]  This is me explaining this for the Florida real estate exam.  It works the same way in real life that it does on the exam except that the input is "given" in the classroom.  Out on the street, you have to get the income, vacancy etc. for yourself.  If you are the buyer, be cautious, not ambitious.
Brandon will probably remove my link above since Bigger Pockets does not allow self promotion.  This is on my You Tube page.  My user name is ClimerSchool.  It is not my intent to self promote. I  have nothing to sell to you. It is my intent to help you learn.  If you don't know how to read a pro forma statement you need to get that info somewhere. The next video is the cash on cash ratios and other performance ratios that you also need to understand if you are working with banks and institutional lenders.

I hope this adds some value for you.

Savannah Leigh · Answer

Sure.  It's a simple formula I made up that seems to work..it will leave you out of other bigger markets.  for those, it's a gut call

i don't proscribe to the (successful, but ... not mine yet) strategy that cash flow is Net Operating Income (NOI)

I see cash flow as what's left when it's all taken out.  Like:

rent
-30% rent for maintenance and vacancy pad (until a STRONG savings is built.  then use it to buy another unit, and start over)

-10% rent for management.  Whether you do the work or hire it...someone should get paid

-taxes, insurance, utilities, sewer, whatever the landlord pays.

-$100 per month per unit for profit. THIS MAY BE YOUR ONLY REAL CASH FLOW FOR A WHILE.

=balance tells you how much the mortgage payment/interest is.

use mortgagecalculator.org ( I enter 6.5% 20 yrs.) to find out the mortgage.

this is your max value.  Yes, most mortgages call for 20% down payment.  that 20% is your safety

take max value, minus repairs needed. gives you current value of the home

in rentals.  Comps dont matter to me.  Income

Christina R. · Answer

Savannah Leigh - I get your formula for wholsaling - but I don't speak fluent investor just yet . . .could you please restate the rental max offers in a way someone who isn't a pretty seasoned investor can understand?  Thanks for your time

Brandon Turner · Answer

Hey Jordan Lives - you might also want to look here, on the "Education" chapter of the Ultimate Beginner's Guide:

http://www.biggerpockets.com/real-estate-investing/education

Savannah Leigh · Answer

Wholesale....ARV mnus  40pct minus rehab is mao.  MAX
rental.  Rent -30pct maint/vacancy-10pct mgmt - 100/month profit - taxes, insurance, hard costs leaves mortgage ppayment

mortgage payment tells mortgage. Minus 110% of rehab needed is max offer

t

Ziv Magen · Answer

Happy to share our simplified version if you wish, Jordan. It has broad categories rather than specific terms, you may find it easily adjustable. PM me if you want a copy.

Jordan L. · Answer

You all are amazing! Thanks. I would like to know if a property worth buying, and finding the cash flow on a multiunit purchase.

Anne S. · Answer

Hello Jordan Lives,

Will Barnard is definitely right. It's nearly impossible to place a single rule to fit everything since there are so many variables and rules change depending on markets. That's what makes REI fun and challenging though! A great place to start is the BP Free Beginner's Guide which has links to articles on some of the rules. Here is a chapter on the 50% and 2% rules that I found helpful:

http://www.biggerpockets.com/real-estate-investing/find-property

There are also many different files in the BP FilePlace which contain Excel spreadsheets for doing calculations. Check them out too!

Jon Holdman · Answer

If you just mean the various formula's for calculating the various numbers we use for real estate, Frank Gallinelli's book is great:

What Every Real Estate Investor Needs to Know about Cash Flow... And 36 Other Key Financial Measures

Frank's a member here, but I guess we're not colleagues, so I can't  @  him.

Will Barnard · Answer

Are you referring to buy and hold deals? If so, read up on the 50% rule and the 2% rule. There are many threads on these two important rules for buy and hold, and within these threads, there is a lot of mention regarding the necessary adjustments to each rule based on specific circumstances.

THERE IS NO SINGLE ONE RULE FITS ALL!!!