 Purchase evaluator (by Deb Beebe [OR]) Oct 13, 2020 2:18 AM
 Purchase evaluator (by Hoosier [IN]) Oct 13, 2020 2:25 AM
Purchase evaluator (by Hoosier [IN]) Oct 13, 2020 2:26 AM
Purchase evaluator (by NE [PA]) Oct 13, 2020 7:11 AM
Purchase evaluator (by WMH [NC]) Oct 13, 2020 8:49 AM
Purchase evaluator (by Ken [NY]) Oct 13, 2020 9:19 AM
Purchase evaluator (by 6x6 [TN]) Oct 13, 2020 9:37 AM
Purchase evaluator (by 6x6 [TN]) Oct 13, 2020 9:43 AM
Purchase evaluator (by Ken [NY]) Oct 13, 2020 9:50 AM
Purchase evaluator (by 6x6 [TN]) Oct 13, 2020 9:55 AM
Purchase evaluator (by David [MI]) Oct 13, 2020 10:26 AM
Purchase evaluator (by David [MI]) Oct 13, 2020 10:27 AM
Purchase evaluator (by 6x6 [TN]) Oct 13, 2020 11:06 AM
Purchase evaluator (by Oregon Woodsmoke [ID]) Oct 13, 2020 11:38 AM
Purchase evaluator (by Hoosier [IN]) Oct 14, 2020 1:15 AM
Purchase evaluator (by Oregon Woodsmoke [ID]) Oct 14, 2020 1:27 PM
Purchase evaluator (by Ray-N-Pa [PA]) Oct 15, 2020 6:06 PM
Purchase evaluator (by Deb Beebe [OR]) Posted on: Oct 13, 2020 2:18 AM
Message:
Holding cash to buy when market drops
Do you use property evaluator software or website? How do you anayze? --216.155.xxx.xxx |
Purchase evaluator (by Hoosier [IN]) Posted on: Oct 13, 2020 2:25 AM
Message:
Google "cap rate rental property".
The hard part is PROPERLY estimating NOI. Too many people are optimistic about expenses. Also must include your time...if you're going to be the property manager then assume 10% for that.
--99.92.xxx.xxx |
Purchase evaluator (by Hoosier [IN]) Posted on: Oct 13, 2020 2:26 AM
Message:
I do this calculation in Microsoft Excel. --99.92.xxx.xxx |
Purchase evaluator (by NE [PA]) Posted on: Oct 13, 2020 7:11 AM
Message:
Spiral bound notebook and a pencil. --70.44.xxx.xx |
Purchase evaluator (by WMH [NC]) Posted on: Oct 13, 2020 8:49 AM
Message:
These days, with the cost of materials and labor so high, on top of real estate itself being in a bubble, I haven't seen anything worth buying in a year.
The last ADU we did - finished last month - cost us double what similar renovations did in days gone by. And took twice as long. That doesn't include new windows and doors, and exterior paint job. That just includes renovating the interior: new cabinets, counters, flooring, bathroom fixtures, etc. Same thing we always do using the same materials we always do. And it was double.
Prices were climbing as he was working on it, and availability of materials was dropping. He had to drive around to different cities just to get basic stuff.
It will take a full year's gross rent to pay for the renovations. --50.82.xxx.xxx |
Purchase evaluator (by Ken [NY]) Posted on: Oct 13, 2020 9:19 AM
Message:
I look at lots of houses,primarily foreclosure auctions,i dont have time to mess around on a computer,the deal has to be so good that i know i will make a good profit.i know prices in my target area and i have broken down repairs so i know what it will cost me to do most repairs quickly. --72.231.xxx.xxx |
Purchase evaluator (by 6x6 [TN]) Posted on: Oct 13, 2020 9:37 AM
Message:
I suppose that you need to figure out what rents are in the area of the purchase as well. I just learned something about commercial lending that I didn't realize from Googling as Hoosier said. I also tend to look at expenses on the high side when trying to figure out what something will cost. --73.120.xx.xxx |
Purchase evaluator (by 6x6 [TN]) Posted on: Oct 13, 2020 9:43 AM
Message:
Ken just brought something to my mind as well.
I try to do everything that I can myself but in evaluating a rental I should be figuring in the expense of the repairs as if I am always hiring someone else to do it. --73.120.xx.xxx |
Purchase evaluator (by Ken [NY]) Posted on: Oct 13, 2020 9:50 AM
Message:
6x6 even if you do the work yourself you need to figure in the repairs as if you are paying someone a fair wage otherwise you are doing a deal and working for free just to do a deal. --72.231.xxx.xxx |
Purchase evaluator (by 6x6 [TN]) Posted on: Oct 13, 2020 9:55 AM
Message:
Agreed. Thank you Ken. Too bad IRS doesn't consider my time. --73.120.xx.xxx |
Purchase evaluator (by David [MI]) Posted on: Oct 13, 2020 10:26 AM
Message:
many years back, I found a great rental property analyzer excel spreadsheet. Very very very detailed analysis and you just plug in your numbers, unfortunately it is no longer online. I will see if I can share it and post a link --50.4.xxx.x |
Purchase evaluator (by David [MI]) Posted on: Oct 13, 2020 10:27 AM
Message:
6x6, you can deduct your own labor. But that also requires you declare that same amount as income and pay income taxes . So it is doable, just doesn't have any net benefit --50.4.xxx.x |
Purchase evaluator (by 6x6 [TN]) Posted on: Oct 13, 2020 11:06 AM
Message:
Thank you David. I asked an accountant about it a few years back and she said that it is just a wash like you mentioned. --73.120.xx.xxx |
Purchase evaluator (by Oregon Woodsmoke [ID]) Posted on: Oct 13, 2020 11:38 AM
Message:
I only buy houses so Cap Rate really doesn't apply. I keep an eye on the local market and watch what prices are doing.
In the west coast states, appreciation is an important component so location is extremely important. It's difficult to buy a rental that throws off a lot of profit right off the bat. It will get there to where it is generating profits, but usually not immediately. --76.178.xx.xx |
Purchase evaluator (by Hoosier [IN]) Posted on: Oct 14, 2020 1:15 AM
Message:
Oregon, why doesn’t cap rate apply to a house? --99.92.xxx.xxx |
Purchase evaluator (by Oregon Woodsmoke [ID]) Posted on: Oct 14, 2020 1:27 PM
Message:
Hoosier, because in my market and in the rest of the west coast states, when you buy a house, you are not competing with other investors. You are competing with homeowners and they only care about fair market price and care nothing at all for Cap rate.
If you want to buy houses based upon cap rate, you won't end up buying anything at all. --76.178.xx.xx |
Purchase evaluator (by Ray-N-Pa [PA]) Posted on: Oct 15, 2020 6:06 PM
Message:
There are other tools out there that you can also use but they don't exist everywhere.
Gross rent multipliers
1% rule
2% rule
ARV rule
affordability index
Cap Rate is an excellent tool for commercial properties so that you measure up a purchase - but more times than not it is apples to oranges. Case in point - I am picking up a stand alone retail franchise location. The cap rate is 6.25%. I could have also picked up a fast food restaurant at 4.75%. The cap rate works well if you had say a BK at 5% vs a McDs at 4.75%.....but that too can be misleading. If the McDs is locked in for 20 years compared to only 10 with the Burger King, your debt service ratio is thrown out the window.
So if you are looking for true PASSIVE income - that is income with no management responsibility AT ALL.....Cap rate is the way to go.
But most folks on this site are hands on owners. It is a noble profession, but it is an active sport that is done best with participation --24.101.xxx.xx |
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