Get today’s worksheet at www.BiggerPockets.com/329worksheet HOW TO ANALYZE RENTAL PROPERTIES For Maximum Cash Flow! A Free Webinar From BiggerPockets.com
WELCOME! (You rock!)
LET ME ASK YOU A QUESTION…
ARE YOU READY TO GET NERDY? (I hope so!)
ARE YOU IN THE RIGHT PLACE?
YOU ARE IN THE RIGHT PLACE IF…
YOU ARE IN THE RIGHT PLACE IF… ➤ You are looking to avoid buying terrible deals
YOU ARE IN THE RIGHT PLACE IF… ➤ You are looking to avoid buying terrible deals ➤ You want to achieve financial freedom through rental properties in the next decade… or less!
YOU ARE IN THE RIGHT PLACE IF… ➤ You are looking to avoid buying terrible deals ➤ You want to achieve financial freedom through rental properties in the next decade… or less! ➤ You have limited time in your day, so you need to streamline the deal analysis process .
WHAT WE’LL BE COVERING TODAY:
WHAT WE’LL BE COVERING TODAY
WHAT WE’LL BE COVERING TODAY ➤ Worksheet download!
WHAT WE’LL BE COVERING TODAY ➤ Worksheet download! ➤ About me and BP
WHAT WE’LL BE COVERING TODAY ➤ Worksheet download! ➤ About me and BP ➤ Why analysis matters
WHAT WE’LL BE COVERING TODAY ➤ Worksheet download! ➤ About me and BP ➤ Why analysis matters ➤ How to analyze deals by hand
WHAT WE’LL BE COVERING TODAY ➤ Worksheet download! ➤ About me and BP ➤ Why analysis matters ➤ How to analyze deals by hand ➤ How to analyze deals using BiggerPockets Analysis tools
WHAT WE’LL BE COVERING TODAY ➤ Worksheet download! ➤ About me and BP ➤ Why analysis matters ➤ How to analyze deals by hand ➤ How to analyze deals using BiggerPockets Analysis tools ➤ My analysis process
WHAT WE’LL BE COVERING TODAY ➤ Worksheet download! ➤ About me and BP ➤ Why analysis matters ➤ How to analyze deals by hand ➤ How to analyze deals using BiggerPockets Analysis tools ➤ My analysis process ➤ Other Pro tools
WHAT WE’LL BE COVERING TODAY ➤ Worksheet download! ➤ About me and BP ➤ Why analysis matters ➤ How to analyze deals by hand ➤ How to analyze deals using BiggerPockets Analysis tools ➤ My analysis process ➤ Other Pro tools ➤ Question/Answer
FOLLOW ALONG WITH TODAY’S WORKSHEET: www.BiggerPockets.com/329worksheet
Special Gift: The www.BiggerPockets.com/books WORKSHEET: www.BiggerPockets.com/909worksheet
Special Gifts: (At the end!) www.BiggerPockets.com/______ www.BiggerPockets.com/_______
ABOUT ME (Brandon Turner)
BRANDON
BRANDON Cohost of BP Podcast
BRANDON Cohost of BP Podcast Real estate investor
BRANDON Cohost of BP Podcast Real estate investor Guitar player & drummer
BRANDON Cohost of BP Podcast Real estate investor Guitar player & drummer Author
BRANDON Cohost of BP Podcast Real estate investor Guitar player & drummer Author Once was in a barbershop quartet!
My family… :)
BIGGERPOCKETS The Real Estate Investing Social Network, Marketplace, and Information Hub.
BIGGERPOCKETS The Real Estate Investing Social Network, Marketplace, and Information Hub. Blogs Forums Podcast Books Conference Meetups Videos Forms/Files Networking
WHY ANALYSIS MATTERS (Seriously…)
THE MARTIN DISASTER Ugh…
WHAT DO YOU WANT REAL ESTATE TO DO FOR YOU? What is your goal? What is your “why?”
“ Some people want it to happen, some wish it would happen, others make it happen. -Michael Jordan
IF YOU WANT YOUR GOALS AND DREAMS TO COME TRUE… YOU HAVE TO LEARN TO ANALYZE DEALS CORRECTLY.
HOW TO ANALYZE DEALS BY HAND… (because you need to know how…)
ANALYZING CASH FLOW (Cha ching!)
ANALYZING CASH FLOW INCOME - EXPENSES =CASH FLOW
ANALYZING CASH FLOW INCOME EXPENSES Rental Income Laundry Income Storage Income Late fees
ANALYZING CASH FLOW INCOME EXPENSES • Taxes • Garbage Rental Income • Insurance • Gas • Vacancy • Electricity Laundry Income • Repairs • HOA fees • CapEx • Snow removal Storage Income • Water • Lawn care • Sewer • Property management Late fees
HOW DO YOU FIND OUT THESE EXPENSES?
LET’S LOOK AT A REAL- LIFE EXAMPLE (just for fun!)
(REMEMBER … MATH IS RELATIVE)
DEAL OR NO-DEAL? (don’t worry… I won’t hold you to it!)
ANALYZING CASH FLOW INCOME EXPENSES
ANALYZING CASH FLOW INCOME EXPENSES $895
ANALYZING CASH FLOW • Taxes • Insurance • Vacancy • Repairs • Capital expenditures • Water • Sewer • Garbage • Gas • Electricity • HOA fees • Snow removal • Lawn care • Property management
ANALYZING CASH FLOW $124.94 Taxes $45.00 Insurance $44.75 (5%) Vacancy $44.75 (5%) Repairs $161.10 (18%) CapEx $0 Water $0 Sewer $0 Garbage Gas $0 Electricity $0 HOA fees $0 Snow removal $0 Lawn care $0 Property management $89.50 (10%) Operating Expenses: $510.04
ANALYZING CASH FLOW INCOME EXPENSES $895 $510.04
WHAT EXPENSE DID WE NOT INCLUDE?
THE MORTGAGE
THE MORTGAGE $74,900 x .8 = $59,920.00
THE MORTGAGE $74,900 x .8 = $59,920.00
THE MORTGAGE $74,900 x .8 = $59,920.00 $321.66
ANALYZING CASH FLOW INCOME EXPENSES $895 $510.04
ANALYZING CASH FLOW INCOME EXPENSES $895 $510.04 + $321.66
ANALYZING CASH FLOW INCOME EXPENSES $895 $510.04 + $321.66 $831.70
ANALYZING CASH FLOW $895.00 INCOME -$831.70 - EXPENSES =CASH FLOW $63.30
IS $63.30 A GOOD AMOUNT OF CASH FLOW?
ANALYZING RETURN ON INVESTMENT (AKA “ROI”)
CASH ON CASH RETURN ON INVESTMENT = COROI (The return on investment just from the cash flow)
COCROI = ANNUAL CASH FLOW TOTAL INVESTED CAPITAL
COCROI = ANNUAL CASH FLOW TOTAL INVESTED CAPITAL $63.30 X 12 COCROI = ?????
HOW MUCH MONEY DID WE PUT INTO THIS DEAL?
HOW MUCH CAPITAL DID WE INVEST? ➤ Down Payment: $14,980.00 ➤ Closing costs: $3,500.00 ➤ Repairs: $8,500.00 ➤ Misc Other: $2500.00 $29,480.00
COCROI = ANNUAL CASH FLOW TOTAL INVESTED CAPITAL $63.30 X 12 COCROI = ?????
COCROI = ANNUAL CASH FLOW TOTAL INVESTED CAPITAL $63.30 X 12 COCROI = $29,480.00
COCROI = ANNUAL CASH FLOW TOTAL INVESTED CAPITAL $759.60 COCROI = $29,480.00
COCROI = ANNUAL CASH FLOW TOTAL INVESTED CAPITAL $759.60 2.57% $29,480.00
IS 2.57% CASH ON CASH RETURN A GOOD AMOUNT OF CASH FLOW?
TOTAL RETURN ON INVESTMENT (now we’re getting somewhere…)
HOW GOOD WILL THIS DEAL LOOK IF I HOLD IT FOR 5 YEARS?
WHAT IF THE MARKET APPRECIATES 5% … OR 0%?
HOW MUCH PROFIT WILL I MAKE IF I HOLD IT FOR 10 YEARS AND THEN SELL?
LET’S LOOK AT AN EASIER AND FASTER WAY TO ANALYZE DEALS www.BiggerPockets.com/ analysis
MY DEAL ANALYSIS PROCESS… It’s just mathematics…
MY DEAL ANALYSIS PROCESS WHY AREN’T YOU BUYING MORE DEALS THIS MONTH?
MY DEAL ANALYSIS PROCESS
MY DEAL ANALYSIS PROCESS ➤ Analyze three deals every day (100 per month)
MY DEAL ANALYSIS PROCESS ➤ Analyze three deals every day (100 per month) ➤ Make o ff ers on 10% of them (10 o ff ers)
MY DEAL ANALYSIS PROCESS ➤ Analyze three deals every day (100 per month) ➤ Make o ff ers on 10% of them (10 o ff ers) ➤ Can you get a 10% acceptance rate? (1 deal)
“ When you define your process, and commit to it for an extended period of time, the results take care of themselves. -Hal Elrod Author of The Miracle Morning
This is not just theory.
This is not just theory. This is how thousands of real estate investors, including myself, have found financial freedom.
Two Ways to work this process: Slow efficient
So… here are three big questions:
Will you start analyzing deals correctly?
Will you commit to a process for analyzing deals regularly - maybe even every day?
Will you do what it takes to achieve your financial goals?
I don’t know why you came here today.
I don’t know why you came here today. Tired of working your full-time job Need to start preparing for your future retirement Tired of being a “wantrapreneur.”
Our goal at BiggerPockets is to make you reach your financial goals through real estate. So we’ve created some incredible tools to help you get there faster and with less pain.
We realize real estate investing often feels like this:
We want to help you feel like this:
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