Evaluating properties

Rehabbing, Fix and Flip, Rental Properties
1

Hello,

Can you more experienced investors please give us amatuers some advice on how you determine if a rental unit or otherwise would be a good investment? I am looking at a certain rental property and can provide the details if you need them.

Do you have a formula or spreadsheet you use? If so, please provide it.

Thanks

2

Chaser,

I follow a couple of simple rules when evaluating rental properties.

  1. the positive cash flow should be at least 1/2 of the mortgage payment (P & I).

  2. I must have at least 30% equity once the repairs are done.

It’s just about that simple!

Mike

3

Many thanks to Mike and Chaser. I am a newbie, trying to put together a business plan. This was exactly my question and a great answer.

Many thanks and continued success!
VickyS

4

I run a tad thinner on my equity and on my cashflow but these are good rules of thumb.

My rentals tend to be lower cost ($40 - 65K) and I look for at least $125 a month ($1500 a year) PCF…all of mine are higher and it actually comes out to about PCF = 1/2 months mortgage.

Keith