How I Analyze a Rental Property (in-depth video from Brandon!)

86 Replies

Hey folks, 

A triplex came on the MLS today piqued my interest, so I decided to analyze it. Then I thought... maybe I should record my thoughts out loud to share with the BiggerPockets audience. Maybe that'll help folks?

So... I did :)

Enjoy! (And if you like the video, be sure to click to go to the actual YouTube page and give it a "Thumbs Up" on the YouTube player!)

(click the gear on the bottom right corner to change the video quality settings to HD)

What do you think? Would you buy it? What price would make it "awesome" to you?

Are you able analyze this income potential as "live in 1BR 1 BA" and in law suite with 4 bedrooms 2 baths please ? Or connect me to share in private https://www.youtube.com/watch?v=6d4D36rI8es

@Brandon Turner After working out the numbers and before you place an offer, do you recommend visiting the property first? It's very difficult (and near impossible) for investors that have a full time job to be able to visit multiple properties per day just so they can make multiple offers per day. I know some people are adamant that you absolutely have to go to a showing but if I had to do that, then that means I would be offering on a whole lot less properties which in turn reduces the chances that I would be able to get a good deal off the MLS.

Brandon, thanks for posting. Awesome info.

If you buy and repair property with all cash then do a cash out refi, how does the refi factor into the analysis?  I'm assuming you plug the refinance info into the mortgage section?

-Mike

Thank you! Very helpful. I analyzed 11 properties just last night after watching the video. I've analyzed some before but this helped explain how to "read" the numbers. 

I'm off to look at properties!

Hey @Jimmy Chin - good question. So, maybe. I mean, if the pictures are super clear or you have a good way of knowing what the condition is like, maybe. Sometimes my agent will simply tell me the condition if he's been in the house and I'll base my offer on that. Of course, I'll always add an inspection contingency in the mix so I can back out of I find the property is far worse than I estimated.  Or, you could also hire someone for fairly cheap (a local handyman perhaps) to do all your initial walk-throughs. Finally, I typically will analyze quite a few deals before finding one that excites me enough to go look at it in person. However, when that happens, I'll make the time needed (I also work a full-time job, here at BP, technically.) Lunch time, evenings, whatever. I usually look at a few houses a month in person. This deal, though, where the numbers don't make sense without a massive discount, I won't even look at in person until I get closer to the right number.

@Account Closed - rock on! Thanks for that! :) Mind if I share that testimonial in the future!? :)

Great post! I'm a newbie, so the walkthrough was extremely helpful. @Brandon Turner, would you typically modify this analysis in any way if you were planning to house hack the property? Perhaps not look to be cashflowing as much? Obviously, you'd want to cashflow if possible, but getting the mortgage covered is like cashflowing, in a sense. Correct?

Great video, @Brandon Turner ! As a newbie investor it was nice to see the process of analyzing the numbers and letting them speak (objectively) for themselves, rather than allowing emotions and excitement to cloud judgment. I look forward to more videos like this in the future.

@Brandon Turner , this is exactly what I was looking for! I've started using the tool but there were some sections I wasn't sure about. You talking through it made it extremely easy to identify what I should and shouldn't worry about! Keep up the amazing work my friend!

Hi Brandon,

Thanks a bunch. I am looking a calculator and looking at the numbers, it is better to try to include any repair/upgrade cost in the loan. I did talk to the mort broker and he is having no problem including some of the upgrade cost in the loan. Using the calculator, I am showing a much better ROI vs not including the upgrades in the loan.