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

63 Replies

I got some questions from watching the video and I am hoping someone could help me

  1. How can I find out more about the market I live in? This question was inspired by Brandon's comment on needing flood insurance.
  2. I am confused on the 50% rule and the Cash on Cash return
  3. What is a good Monthly Cashflow or Cash on Cash Reutrn if you are House Hacking?

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!

Thanks for putting this online.  I'm a real newbie.  I think the parts that I am still unsure about are the costs.  I haven't looked at any properties but it sounds like you have to know what the costs for insurances, water, etc. in the area are.  Are there any rules of thumb for costs if you are looking online at different markets and are unfamiliar with those markets?  Thanks.

Hi all,

Very good tutorial on how to run an initial business case on a property.  

In the section of the video where he is discussing the 50% Rule (11:55 - 12:45) I don't understand where the real value of $105 cashflow/month differs from the theoretical 50% cashflow/month of $310 if the included variable expenses only total 30%?  

Do the fixed expenses (water, garbage, insurance, flood insurance, property taxes, landscaping account for this difference?

By adding the closing costs and the initial repairs into the COC ROI (Cash on Cash) equation, you get results that are only indicative of the first year of owning the rental. Wouldn't it be better to analyze the COC returns by not including the closing costs and initial repairs or at least taking the $5000 in repairs and $2500 in closing costs and spreading it out over several years??? This would give more accurate numbers for determining your COC return rate.

I made an auto-populating spreadsheet that I derived from the four-square worksheet, and I'm happy to share it with the BiggerPockets community. I also wrote a program to automatically populate the spreadsheet with MLS listings from my agent. I'm leaving this here in case someone wants to adapt my version of the spreadsheet (supports multiple properties, one per row), as well as an automated, programmatic way of populating the spreadsheet given a paragonrels.com or fnimls.com link from an agent/broker. Enjoy!

https://github.com/earlvanze/Paragon-MLS-API-Interface The program now supports given only a list of MLS numbers and a System ID. If your region's MLS doesn't use Paragon's undocumented API, the code won't work without significant modifications to the get_properties() function. I am planning to have this code running on a website using Flask soon so I can access it while mobile, but it will still need to use the Paragon API which not every region uses.

Updated over 1 year ago

The Google Sheet file is linked in the GitHub link, AND this past weekend I made the program into an online site you can use with your own copy of the Google Sheet. Try it out with your *.paragonrels.com region: https://api-project-32857849252.appspot.com I know it works with crmls, hudson, gamls, triangle, and probably others. I found test links on Twitter.

What you didn't talk about is potential value adds. Laundry. That's easy to throw in a spreadsheet. But what about possibility of a big lot giving the potential to add bedrooms/units to property, or even subdivide and build a new single to sell. I am currently intrigued by a 3-unit wholesale property I would want to BRRRR in Pawtucket, RI. Those numbers are not great. But it has a large lot, which I could subdivide and other sell for $40 or build a $150k single family and sell it for $225k. How do you throw that into a proforma?

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