Analyzing new deals

2 Replies

As a new investor one thing I think that will help me that was recently introduced to me by another investor is a spreadsheet that can analyze potential deals for me. For example being able to input different numbers such as expenses, down payment, rent, or etc. Then having the program automatically calculate the numbers inputted to give me back what the coc return is or what my ending balance each month should be. I have a decent idea of what some of the things for expenses and what some of the numbers should be but struggling to find other things like what current interest rates will be and the equation. Also calculating things like cap ex costs. Does anyone potentially have any helpful videos or books that helps to explain?  Or would you say I hand write it out at first to try and understand all the different expenses and calculations?

I learned most of this through podcasts, youtube videos, and other investors sharing their deal analysis sheets with me, but it's important to understand that your spreadsheet is always changing and evolving.  The most important thing about it is it's YOUR numbers, and when you make a deal it's important that the deal works for you and that's why I always recommend an investor to build their own sheet and not use someone else's explicitly... Use pieces of it, but make sure you completely understand your numbers. 

Meetups will be another great place to learn these things and ask questions. Generally, the Bigger Pockets calculator can serve as a starting point for all the data points and metrics you want to be familiar with. From there, search each one on the internet... Cap Rate for example... learn about cap rate and how it's useful, learn how to calculate it and understand why it matters and when to use it. Studying CapEx comes from experience, calling vendors and inquiring about pricing, and from going to the store and looking at costs for building materials.

@Goanar Mar I’ve found the BiggerPockets calculators to be thorough enough for my needs. I’m sure you can get more in depth but I haven’t had a problem yet.

Also once you start building your team you may be able to get some advice that way too.

I’ve got a great contractor that helps me make a lot of decisions because not only is he in the construction end of the business but he also has some of his own property and manages some for others.

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