Real Estate Consultant · NH · Member since 2019 · 27 posts · 5 votes
I am looking for input on methods being used to quickly qualify or disqualify properties. Spending a lot of time running numbers and wanted input from the community on what key metrics are being used to evaluate a property quickly so it either gets a deeper dive or it is scratched from the list.
Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes
6y
Some use the 1% Rule. Goes like this:
Property must have monthly rent of at least 1% of the "all in" cost (purchase price + closing costs + rehab + holding costs). Example: If it rents for $500, spend no more than $50,000.
I use the 2% Rule. $30,000 "all in" rents for $600.
Most houses that do not meet at least the 1% Rule will not cash flow positive unless you pay cash or have a sizable down payment. It's a quick-n-dirty method, and there are others.
Rental Property Investor · Grants Pass, OR · Member since 2019 · 7 posts · 1 vote
6y
I created my own Excel workbook that calculates whether or not I should buy a property. The same tool then determines if it should be a flip and sell or to buy and rent or BRRRR. I used the calculations from local estimates to determine average costs depending on what is needed for repairs and used those estimates to determine different levels of repairs. I made check boxes to be checked for different repairs and uses the repair levels for the costs.
The same workbook also tracks properties cashflow, expenses, and repairs and allocates them to each associated rental as I enter them into one worksheet. They then go into individual worksheets automatically which in turn calculates my cash flow, expenses, deposits, withdrawals, and anything else you can imagine. Then in turn provides me my income statement and expense statement automatically.
I am new to investing in real estate and dont have any properties, but plan to. I create things like this for fun and have talked to investors and they said it's pretty darn accurate for the area it is estimating in. I also have a separate worksheet that allows changes for different market areas for repair estimates. I am currently in college for Business and Accounting and so I enjoy making Excel sheets for calculations and for other calculating solutions.
Rental Property Investor · Mcallen, TX · Member since 2017 · 17 posts · 6 votes
6y
@Michael Ealy
Good day micheal !
Would you be able to share the analyzer to me as well! I’ve got a property and property taxes could increased to 9580 this year wondering if I should selll or keep and need to analyze the property this would be a helpful tool thanks in advance
Investor · SC NC, VA · Member since 2020 · 1k+ posts · 756 votes
6y
Cap rate is the quick and dirty that simply peaks my interest. In my area most sell near downtown or the college at 6%, 5-10 blocks away and it rises to 7.5%. in those area if you see an 8 or 9 I’ll investigate further to see if it’s deferred maintenance. It’s a starting Point.
St.Pete Beach, FL · Member since 2017 · 11 posts · 0 votes
6y
@Tony Wallis
I've recently purchased 5 properties and put a lot of thought into dis- qualifying properties quickly. Once you know the "monthly" income, not the yearly- multiply that times 100. A property bringing in $2,000 monthly you can pay 200k for. This is a sleight variation from the 1% rule. It works VERY well and will always give you over. 10 CAP provided the expenses and meters on the apartments are all in line etc
Corpus Christi, TX · Member since 2020 · 3 posts · 0 votes
6y
@Jeffery Wilen
Agreed!! I also asked for the analyzer on impulse because it could be such a valuable tool. However, after looking at his page and seeing the address, I went to the site and requested it myself and got it...lol!
We have a screening spread sheet we use to quickly qualify or disqualify a deal before doing full analysis and under writting. Message me your email and I'd be happy to send it to you.