When investors say numbers, meaning finding out numbers, what do they mean? What should I do?
Usually Numbers mean the actual (not advertised) numbers regarding a property’s income, expenses and cashflow. Generally, the numbers will fall into those categories. For instance, if I ask you you what the numbers regarding a duplex for sale are, I’m looking for:
Purchase price- $100,000
Income(rents) $ 1000
Vacancy rate $10%
Expenses $200
Taxes $ 150
Mortgage - $600
I think you get the idea. But there is a section on this site that has definitions of the acronyms you see here. I don’t know where it is, but it’s here.
And/Or…how much money is a property actually worth (meaning how much can I sell it for), how much money will it really take to fix it up, and how much money will is cost to purchase it…
Chris
Keep in mind that an income property’s worth is directly related to the income & expenses associated with it. If an appraiser says a duplex is worth $200k. But after the expenses are subtracted from the rental income, you only have $500 to pay a $200k motrgage, you’ll be in a negative cashflow situation. The bottom line is that the property has to be financially self sustaining.
The bottomline to this (any any REI) is that you kinda need to know what you are going to do with it. If you are going to “fix and flip”, running the numbers means figuring out what to pay, how much it will cost to fix, what your holding costs will be, and how much you will profit at the end.
If you are going to “buy and hold”, running the numbers means doing a full cashflow analysis to see if you will have any money left at the end of the month after ALL the bills are paid (and ALL the bills does not mean PITI!)…
If you are ging to wholesale it, running the numbers means figuring out what you need to pay for a property, how much it will cost you to hold until resold, and what you need to get for it, still leaving your buyer some “room” in his deal.
Keith
Oh I see now. It’s OK if you have to pay $300/ mo jut to cover your mortgage. As long as you made $50/ mo. :rolleyes. Get real. If you have to put into an investment each month because your expenses AND your mortgage are more than the income the property brings in, how many properties can you buy like that?? You need money in your pocket AFTER all expenses AND PITI are deducted from the PROPERTY’S income. Not your wallet.
Huh?
:huh
That’s what I said…(or maybe you weren’t talking to me…?)
Keith
Look at your post and you’ll se that you said PITI are NOT included in the bills. You call it what you want. But expenses take money from the income as well as PITI. If you have money left after all bills are paid including the PITI, then you have positive cashflow… Looking at mu post I think I may have to switch to decaf!! :shocked
No, I said, “…and ALL the bills does not mean PITI!” and my intent was that there are far more expenses (e.g., “bills”) than JUST PITI! But, I can see how my wording may have been misleading!
Keith