What will that property cost you?

Question

Hey everyone- a friend of mine is looking for feedback/beta users for a tool that calculates the long term cost of any property you're evaluating in minutes. His idea is to help people analyze long term costs faster that others, providing a nice competitive advantage.

Anyone interested to meet the developer, give me a shout.

Charles Perkins · Answer

Any cost analysis is only as good as the numbers you start with and the assumptions made about future events.

Joe Villeneuve · Answer

Is he talking about cost based on what the total cost of the property would be over time, or just what the total cost of the property would be to the REI over time?  They are different, or at least they should be.

Charles Perkins · Answer

There also many unknowns like the actual inflation rate, an estimate is necessary.  While we should be very diligent in our due diligence, there can be many hidden surprises creating fluctuating repair costs and changing the useful life of assets.  Pests, rodents, severe weather, destructive tenants are also unknown and can only be estimated.  Experiences help us to determine good estimates and I generally estimate on the high side and can enjoy the pleasant surprises.

Theresa Holl · Answer

Excellent point! Both.  Once the investor enters the life expectancy of the capital expenses, financing, short term financing, rehab costs, turn costs, maintenance, and expected sale or rental revenue, the property management features will project the cashflow, equity, and profitability. Graphic projections will be created to anticipate when capital expenses might occur.  This gives the investor the option to either solicit bids from the program’s contacts section or time the sale to avoid possible expenses.  This could also help the investor see if those items will need replacing at a narrow or broad timeframe, thus affecting the purchase offer price. The vision of this program is to help the investor determine if it is a viable file AND to monitor the property’s investment value after purchase.

Theresa Holl · Answer

This is very good insight. This is where the science of the program gives way to the art of the investor.  For example, if the investor knows the H2O heater, roof, appliances, or HVAC unit are of different life expectancy than the average the program defaults to, we will have the future ability to enter the investor’s expectancy.  Perhaps lower if it is a rental, as renters are not known for maintenance of capital items.  The vision of this program is to help the investor determine if it is a viable file AND to monitor the property’s investment value after purchase.

Theresa Holl · Answer

Yes - so the assumptions are a huge part of it.  The idea is that the cost of owning it (repairs, maintenance, etc...) are all built in.  He would love some early feedback from pros who are likely to use something like this.

What will that property cost you?

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