How do you gather the information to determine whether a property will cash flow?

Question

How do you find out things like what rent you will be able to charge for a unit, what kind of amenities the locals need/want, what your maintenance costs will be, etc?

I am trying to crunch the numbers on a few properties but I realized I don't know where to gather a lot of the required info.

Also, can you use an fha loan to buy a multifamily home to live in and also rent out the other part of the house?

Thanks!

Will Barnard · Answer

The answers to your questions have been presented in great detail and from many different viewpoints in the landlrording and deal analysis forums. I suggest you get over there and do some reading.

Sean Corcoran · Answer

cash flow = NOI - Mortage

NOI = Maintenace - Vacancies - Insurance - Taxes - Management Fees - Water - Utilities

That is the simple version

Bill Gulley · Answer

Hi, Yes, you can have a FHA loan on an owner occuipied 1-4 family dwelling. Bill

Steve Babiak · Answer

Regarding the FHA question: I was looking at buying a duplex in foreclosure that turns out was mortaged with an FHA product when the owner bought.  The owner did live in one unit (even well past the foreclosure, but that's another story).  That property was purchased a few years back though.  So my guess is that this might still be possible.
          
          I'm pretty sure that you need to start using the "search" feature on BP to get  some of these answers.  The questions sure sound familiar.
          
          And if you aren't happy with the BP search, you can always use google and add this to your query:
          site: biggerpockets.com
          
          But take the space out after the colon; I had to insert that so that the text did not get mangled by the BP servers.  That will tell google to only look on BP.

Corey Demuth · Answer

anyone else? Also, anything about the fha question?

Bill Gulley · Answer

Hi, I'll take the first question and others can chime in on all of them too.
          
          If the property is leased and you have access to the owner or listing agent. Ask for the books and a copy of the last two years Schedule C.
          
          Another way to verify this is to ask others. The bank that made the loan, if it's local, will give you an idea of what they look at for rents in that area.
          
          Sometimes you can just call an appraiser and say, what is the range of rents in that area. They will probably tell you, maybe even more information.
          
          Ask other landlords in the area, it's no secret, they advertise them all the time. Call management companies and say if I buy this, what's your management fee and what could I get.
          
          If the units are in the lower/medium rent range, call your local housing authority, they will tell you what fair market rents are and what they are going for in that area. By the way, the PHA might inspect the property for you if you want to put them in Sec. 8 telling them its a condition of you buying that they pass their inspection, that you'd like to work with them (and follow through)
          
          You should get enough info this way, but there are many more ways to find out.
          
          Even though a place is for sale and the listing says do not bother my tenants, you can find out alot there.
          
          I have knocked on the house with the for sale sign and said:
          "Hi, I hate to bother you, but do you know of any palces to rent in this area?"
          I didn't ask about his place being for sale! What ever he says, I can say, well I wish I could find a place like this to rent, it looks nice. Whoever they are, you just complimented them, most will begin talking to you. The fact that you were there will never get back to the listing agent or seller, so long as you don't see them again, since you were looking for rentals in the area. You can do that with neighbors too and ask if they know what rents are in the area. Talk long enough, they might tell you what they know about the proeprty too.
          Good Luck, Bill

How do you gather the information to determine whether a property will cash flow?

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