Analyzing Rental Property

What exactly are you looking for when analyzing rental property? I mean other than crunching the numbers. I can do that all day long, but what other information do you need before saying that it’s a “deal”?

You kind of answered your own question. If you can crunch the numbers, meaning calculate rehab costs, carrying costs, and then calculate cash flow analyses and the like, what else would you want to know?
I’m not sure if this is what you’re referring to, but I like to know the neighborhood my houses are in. Some people don’t mind investing in warzones but I dont want to. I also look for an intangible quality in the houses I buy that I call “potential”. What can I see in the house in its finished condition that sets is apart from other houses? Kind of like an artist looking at a blank canvas…You also should think about how the property fits into your long term investment strategy. Sure it might cash flow, but is it the type of deal that you want to invest your capital into for the long haul? (and will it fit your portfolio?)

What is crunching the numbers all about… :cool

Running a successful rental property business is ALL ABOUT THE NUMBERS! I don’t buy a property because it is pretty or in a neighborhood where I would like to live. I buy rentals for only one reason: TO MAKE MONEY! It’s just that simple.


What if you were going to flip the house. What is everything that you consider when crunching the numbers?

When you are flipping a house you have to be able to buy the house fix it up hold it and sell it. All those parts have costs associated with them. All those costs have to be less than the amount of profit you want to make on the house.

You have to know what every house just like that house has sold for in the past 6 months and how long they were on the market. I didn’t say listed for I said sold for. You need to price the house at a price that it will sell in less than a month. If your carrying costs are $1,000/month and you have to hold that house 3 months. You should have priced the house $3,000 less and sold it in one month. If you hold that house 12 months you should have priced it $12,000 less to sell it in one month. You see where I am going with this?

Everybody wants to fix up a house but the real bane of the flipper is holding the house. That house sits empty so it is subject to vandalism and calamity plus you have to pay for the privilege of holding the house.

Every house will sell within a month at the right price. In my target neighborhood houses usually have to retail at 75% of what the market price is to get a contract in 1 month. Different parts of the city and of course the country are different. But that needs to be your goal.