Investor · Maui, HI · Member since 2009 · 13k+ posts · 3k+ votes
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?
I followed along with this video using a spreadsheet I made and got the same numbers. It was great to see your thought process and also see that my spreadsheet was accurate :)
When analyzing properties on my own I tend to second guess myself as to whether properties are as good as my analysis makes them out to be, and this video was a real confidence booster!
Great video Brandon Turner, not sure if it was intentional but you've effectively shown the value of the pro membership while simplifying what I thought was a nebulous process.
Hey @Tanya Potter ! I wish I had a good quick rule of thumb, but not really. The closing costs are going to depend a bit on your financing. I would just ask a local investor in your town what is typical for them. Or call up a Title company and ask them - they'll know. Typically, for me, its about $2,000 in closing costs not counting lender fees. When I use private money ,there are no lender fees. When I use a bank, it's usually about $2,000 in fees. So with a bank, I estimate $4k total.
As for insurance, I usually estimate about $50/month plus maybe $20 per unit after that. That should be about ballpark, depending on what kind of insuance you get.
@Brandon Turner I have been curious for awhile about how closely do the numbers match reality when you go thru with deals? Are the results within like 5%-10% when you do them? I know it varies person to person and how they analyze, but I have been wondering how well the numbers match reality, assuming all things go according to plan even though I know that won't happen.
Brandon, not to be argey bargey But I did not see where you identified market value of the property. I think that is the starting point of any analysis. What good is cash flow if it is only your overpayment for the property coming back to you in monthly installments?
@Brandon Turner Videos like this are the reason I decided to join BiggerPockets. As someone who is trying to break into real-estate you guys are making the process easier to understand. Keep up the good work!
@Brandon Turner great post and nice little promo to go pro. I'm listening to your podcast daily (about 40 episodes deep over past few weeks), and literally just started evaluated random properties today just to practice and learn the areas I'm looking at.
In this deal evaluation, once you lowered your purchase price, but kept the home value at 115k, couldn't you have adjusted your down payment requirement. what I mean is, is the calculator figuring the down payment as 20% of your purchase amount entered, OR 20% of the property value. Because this would change your cash on cash return, but also your cash flow.
For example, if it was 100k property and you were buying for 90k, and you said you wanted 20% down, would the calculator put in $10k cash down requirement, giving you 20% equity (down payment ) or 18k (20% of purchase amount).
Either way, could the calculator be changed to give us the option to do down payment % based on purchase amount OR HOME VALUE, hence helping show times when you may not have to come out of pocket much?
Ps. This was my BP first post.......many more to come :)
Newbie REI-- terrific. I need to practice, practice practice running #'s so i can get comfortable checking out deals. This video and tool will surely help. Great job Brandon. VERY HELPFUL.
One thing to note is that if you can get a cash flowing rental with instant equity at say 80-90k for this one it doesnt make much sense to not take it. At 90k and some repairs ur at 95k against 115k value say 110k after closing costs, thats a 15k return on a about 20k investment which is insane.
Thank you for making this post Brandon, so many investors never go through the fine details of deals like I have seen you do and it has influenced my real estate investing tremendously. There are a ton of properties out there that appear to be great deals on the surface but when you run the numbers they expose their flaws. The analysis calculators are a great way to start!