All Forum Posts by: Ak Gandhi

@Eric Bilderback finding a good appreciation market with cashflow is the problem many newbie like me face. Would you help out with some suggestions to look at? AZ, TX, FL, TN? What resources/tools/data can be used to see historical appreciation and probable future appreciation? thanks. 

On, appreciation and cash flow debate. 

Doesn't long term returns actually come from the appreciation? 

Wouldn't high cash flow older house which doesn't appreciate at average US appreciation rate would likely eat up big chunk of cash flow in maintenance and capex over long time? and would take a lot of OOS investor's time in managing it. 

Found this historically appreciation data by state: Mapped: The Growth in U.S. House Prices by State (visualcapitalist.com) High cash flow states are below average appreciation over 10years, 5years. 

I am in same boat, looking for MF, if it cash flows from beginning the best. Did you look at FL and AZ? what criterion you used to narrow down to Metro Atlanta and Dallas? 

Thanks everyone for the pointers. Since this post I have learned a lot on how to run numbers on the property. And how to read pro forma(or approximately create one if there is none) and how to ask right questions. And decided on my own criteria. 

Few key points. 

- Buy B or better investments only, at-least for first few deals. 

- Buy as newer house as possible. no pre 1950s for me. Walk away if I can't assess the maintenance or near term capex requirement. Getting interested in new construction. 

- It is okay if the rental is not giving 10-15% cash on cash(after mortgage+maintenance+vacancy+Capex+management) right away. as far as it has decent appreciation potential and numbers work out that it would in 5years from now.

Thanks Again!

So, I added your 15%(10% cap and 5% maintain) cost as monthly property managment cost for simplicity. Your sanitation+internet+gas goes into monthly maintenance cost and 3.5% down. This one doesn't cash flow that way and IRR you getting is from the 3% appreciation estimate an 3% rent increase every year estimate.

If we remove your 20% cost($693) and count it against cash flow it still shows $25 negative flow. 

I am newbie and learning so double check the numbers.  

Hello, thanks for replying. Some excellent points. I am looking for screening criteria to bring the list down to say 10 to 2. I understand that this depends on market to market and property to property. But, when someone is running numbers how they normally go about it. if property needs a rehab within 1-2 years, I would consider it capex, but even after that keep a cash account for unknown maintenance items. 

About property tax, when a house is listed for sale, there is an estimate on listed price, I am not looking at the property tax history. Wouldn't be possible to call assessor's office during screening to find out what the new assessed value be. But I would do that before putting an offer. 

For rents, I am actually looking for houses for rent on zillow, not the estimate that zillow provides on listing page. Thanks for pointing out other sources. 

I am a newbie at RE investing. Finding various SF homes on zillow/redfin and try to run numbers. 

I am trying to use Rental Property Calculator to run numbers. I am aware of 1% rule. 

Question is what type of numbers you put in. 

1. Management companies, I think, charge first months rent and than 5-10% management fees every month depending on the area. Lease renewal every year. So do you add first months rent to closing cost? Say loan closing cost is 3000 and rent is 2000, you normally put 5000 as closing cost? (assuming property is ready to rent, otherwise there would be money required to repair it.)

2. I back calculate property tax and Home insurance from the zillow and redfin and estimate % from there. any better way to do this? How accurate are zillow and redfin numbers? 

3. How much to put under maintenance savings, is 10% a good number? 

4. Do you actually increase the rents by at-least 3% every year? 

5. After all above expense, 5k closing, 5% vacancy rate, 10% managment fees, 10% maintenance, taxes and insurance, 3% yearly rent increase and 3% appreciation, at-least 8-10% CoC and at-least 15% IRR is a realistic goal? Obviously this is for areas where SF cash flows.

6. Are rent estimates accurate on Zillow and Redfin? I estimate rent by finding a property in zillow near to one I am trying to buy. (same # of rooms and bath, similar sqft and similar age). 

Any tools or advice on how to evaluate a deal would be appreciated. 

Also, are there companies which can guide/help investors in finding the area with cashflow and appreciation potential anywhere in the USA and actually gives the projected numbers? 

I am currently looking at areas in Indianapolis, IN. Memphis, TN. Tampa/Lakeland. Phoenix, AZ to get a feel of what is available in those area. 

I am from SF Bay working in tech and own a primary single family.