All Forum Posts by: Joshua Maestas

Welcome to Bigger Pockets Paul! I am located in the Albuquerque area as well. Best of luck to you and your future real estate journey.

 Thanks for pointing that out. What would be the proper way to include Cap Ex? I included the formula for cap rate more of just a way to show where cap rate is derived from.

Hello Preston,

My experience is more in the rental sector so I will start there. When analyzing a property there are many things you are going to need. Most important starting off would be the information pertaining to the actual purchase of the property. I will give you a very simplified break down of an analysis for a rental property. First starting with revenues, then expenses. The Data you would gather would be as following.

Revenues (monthly or annual)

-Monthly Rent (remember to subtract amount for vacancy Ex:10% )

-Any other revenues (Ex: laundry facility)

Expenses (monthly or annual)

-Property Taxes 

-Insurance 

-Maintenance & Repairs 

-Utilities 

-Advertising 

-Property Management 

-Capital Expenditures

Then once you have all of this you would do 

Net Op Income = Income – Expenses (Does not include Debt Service)

Now to figure out cash flow you will have to subtract your debt service from your net operating income.

Cash Flow = NOI – Debt Service

This is a basic analysis but if you want to get a bit more in depth you can use the following to help with your investment decision

Return on Investment

ROI = Cash Flow / Investment Basis

Capitalization Rate

Cap Rate = NOI / Property Price

Total ROI

Total ROI = Total Return / Investment Basis

I hope this gives you somewhat of an idea.

-Joshua M.

Congratulations! It came out great, good choice on the small rock for landscaping. It looks really clean.

Javier,

Generally most investors tend stay away from D class areas. Yes there is still a demand for housing and you will see that properties tend to be a lot cheaper but there is a reason for that. Most owners have a very difficult time selling their properties that are located in bad areas. Tenants are generally not the most upstanding people in these locations and the headaches involved are generally not worth it. I recommend staying away from bad areas and focusing on somewhere where your long term exit strategy will play out. Its not worth being stuck with a good property in a bad location. 

-Joshua M.

A real estate market analysis is a study of current market values of homes, comparable to yours, that helps you determine the market value of your house. Market value is a figure that best describes what a willing buyer will pay for the home under current market conditions. Don't confuse market value with appraised value. Only a licensed appraiser can determine the true value of your home and will do so during escrow. You can, however, determine a price at which to list your home for sale by comparing your home to those in the area that have sold and those currently listed for sale.

An example of things to look for would be as following...

MARKET SALES ANALYSIS (COMPARABLES)
SUBJECT PROPERTY
ADDRESS
ROOMS
BDRMS
BATHS
GAR
AGE
STYLE
SQ FT
CONSTRUCTION
FLOORS
REMARKS

PROPERTIES ON MARKET
ADDRESS
ROOMS
BDRMS
BATHS
GAR
AGE
STYLE
SQ FT
CONSTRUCTION
FLOORS
LIST
PRICE
DAYS ON
MARKET
REMARKS

PROPERTIES SOLD
ADDRESS
ROOMS
BDRMS
BATHS
GAR
AGE
STYLE
SQ FT
CONSTRUCTION
FLOORS
LIST
PRICE
DAYS ON
MARKET
SALE
DATE
SALE
PRICE

PROPERTIES EXPIRED/CANCELLED/RE-LISTED
ADDRESS
ROOMS
BDRMS
BATHS
GAR
AGE
STYLE
SQ FT
CONSTRUCTION
FLOORS
LIST
PRICE
DAYS ON
MARKET
REMARKS

Recommended Price Range $
COMMENTS:
Avg. of Sold Properties $

Avg. of Properties on Mkt. $

Avg. of Properties Expired/Cancelled $

Hello everyone, I'm trying to do a detailed analysis on a Multi family property we own. Specifically I am looking to calculate the cap rate accurately. I understand that NOI/purchase price=Cap rate but my question is what if the note has an additional amount for repairs included? The property was purchased for $510k however the bank loaned an additional $90k and included the closing cost so the actual amount of the loan is $606,687. Would the cap rate be based of the loan value or just the actual purchase price of $510k? Thanks for your help.

-Joshua M.

Hello Gerardo, I think the biggest factor would be dependent on what niche you are trying to get into. If you are looking to flip houses you are definitely going to need more capital or a HML. However if you are looking to get into SFR or Multi family rentals there are ways to take advantage of creative financing and make a deal happen with the amount you have. I would recommend searching the forum on how to invest with little or no money down. Biggerpockets has a whole book on it which I would highly recommend looking in to.

Hello Alex, welcome to BiggerPockets! There is a ton of information on this site about wholesaling. I would recommend checking out The Ultimate Beginner’s Guide to Real Estate Wholesaling. It has of a bunch of tips to help you with your first deal. Good luck to you and your investing endeavors. 

-Joshua

Hello, My recommendation is first focusing on the educational aspects of REI. Learn as much as you guys can until you feel informed enough to make a sound decision. Wholesaling would probably be the cheapest route to go in terms of start up capital however there are still many ways to get into different areas using creative financing. My suggestion is to look into house hacking.

-Joshua M.