I have done a search on this topic. I found http://www.rentincome.com/ which seems to be a great resource, if I only knew how to calculate and input the information needed. I am looking for a web resource that can explain to me like I am a two year old how to calculate cash flow, long-term gain, net operating income etc. I have found various books that I intend on purchasing, but if anyone had any info that might help me now it would be greatly appreciated.
Thanks!
What kind of property are you trying to analyze?
-housebroken
Any and all, but mostly SFR’s.
This works for me, but I’m 4 almost 5. Quick and easy approach = rent to value calculation. That’s monthly rent / unit cost (purchase + repair cost). For me, this number must be 1.50 or better.
Net op income- Some assumption need to be made here. For me, vacancy rate- 5%-10% of monthly rent, uncollectable rents- 5%, management fee- 10%, utilities you will pay, maintenance- 5%, repairs- 5%-10%. Next, plug all that junk into the standard formula to get to NOI. Ideally, you want your NOI to cover any note payment on the property. Sometimes, it won’t and you have to weigh that against potential increases in equity. I’ll give you the formulas if you need. Be careful not to over analyze.
Buy two and call me in the morning.
-housebroken
Hi nor-calREI,
If you haven’t yet found a good online resource for calculating cash flow, I’d like to recommend http://www.RealEstateCritic.com
You don’t need an internet site, REI guru, degree in math, or anything other than a calculator to calculate cash flow.
To determine cash flow, start with the rent and subtract all expenses including property taxes, insurance, utilities paid by the landlord, maintenance allowance, vacancy allowance, management fee, and mortgage payment (principle and interest). That’s it!!! If you end up with a positive number - you have a positive cash flow. If you end up with a negative number, you have a negative cash flow (bad).
To determine Net Operating Income (NOI), start with the rent and subtract all expenses EXCEPT PRINCIPLE AND INTEREST, including property taxes, insurance, utilities paid by the landlord, maintenance allowance, vacancy allowance, and management fee. It’s that simple.
I don’t know what you mean by Long-Term Gain. That could be almost anything.
Good Luck,
Mike
I saw this guy speak once and he was great.
I know it’s not free but if you can’t find any other resource use this. He is good.
http://tomlundstedt.com/products.html
if you’re asking this question you MUST read this book
What every Investor Needs to Know About Cashflow. its $10 on
amazon.com. you might find it free in your local library.
also check out these books
http://topbooklists.blogspot.com/