Help with Bigger Pockets Rental Calculator
Hey y'all,
Can someone help me understand the bigger pockets rental calculator in more depth? Every time I analyze a deal, I always get a negative cashflow return, which seems odd to me. I can imagine that after analyzing over 20 deals that every single one of them, is bad.
Maybe, maybe not, but I would really appreciate help on it.
I am looking at multi-family deals and have an off-market deal, I just need to double triple check my numbers.
Thanks
Kendrick Pratt
I believe you can post the results from the calculators and ask people to review.
In some markets deals don't cashflow. Also, many times you may need to negotiate a deal for it to cashflow. It may not cashflow with conservative estimates when buying at full asking price.
So many do not cashflow. If you post your results, I am glad to help you review it.
Hi Kendrick, I always see a ton of "calling all investors" type MFH listings for sale. They are generally all not very good. BR mentioned in one of his videos that you need to just keep analyzing deals every day and you'll start to see the good ones. When I first started with BP I did that, and had an easy Excel sheet you can just input a couple key numbers into and it does the rest.
The quick 1% rule will tell you alot: Rental Income divided by Price. If your result is under 1%, run. If it's over 1%, it will make very little money. Over 2% it should be decent cashflow.
For example: $2,000 rental income / $250,000 property price=.8% Your expenses (unless you pay all cash) will be in the neighborhood of $2,200 and your income is only $2K.
To your point, most advertised deals stink, unless your willing to accept a low single digit return.
@Paul Koenig how do you analyze a 40 unit deal? Same way?
Quote from @Joe Mathew:
@Paul Koenig how do you analyze a 40 unit deal? Same way?
Hi Joe, commercial is generally a bit of a different animal, because rates and term are different than smaller residential mfh. I don't have as much experience in that regard and I believe some different financing comes into play with balloon loans and utilizing equity over the term of the balloon.
Quote from @Carolyn Yates:
So many do not cashflow. If you post your results, I am glad to help you review it.
Yes thank you and I will absolutely post them. I also apologize in the delay in response, i've been in london the past month and a half.
Quote from @Paul Koenig:
Hi Kendrick, I always see a ton of "calling all investors" type MFH listings for sale. They are generally all not very good. BR mentioned in one of his videos that you need to just keep analyzing deals every day and you'll start to see the good ones. When I first started with BP I did that, and had an easy Excel sheet you can just input a couple key numbers into and it does the rest.
The quick 1% rule will tell you alot: Rental Income divided by Price. If your result is under 1%, run. If it's over 1%, it will make very little money. Over 2% it should be decent cashflow.
For example: $2,000 rental income / $250,000 property price=.8% Your expenses (unless you pay all cash) will be in the neighborhood of $2,200 and your income is only $2K.
To your point, most advertised deals stink, unless your willing to accept a low single digit return.
Paul, thank you so much for the insight on that. I think my location has a lot to do with it also, maybe best for me to be looking in a different location. What you laid out is exactly whats been happening.
Quote from @Kevin Sobilo:
I believe you can post the results from the calculators and ask people to review.
In some markets deals don't cashflow. Also, many times you may need to negotiate a deal for it to cashflow. It may not cashflow with conservative estimates when buying at full asking price.
Kevin, thank you for the response and yeah that very much could be so. I think my location in NY has a lot to do with it.