How To Analyze A Rental Property (The Quick & Dirty Way)

Summary

In this video, Brandon discusses investing in Waco, Texas, focusing on a multi-family property. He reviews property listings on realtor.com, highlighting a duplex with a two-car garage built in 2004. Using BiggerPockets' rental property calculator, he analyzes the property's potential cash flow and return on investment. Brandon considers different purchase prices to achieve a desirable cash-on-cash return, emphasizing the importance of due diligence and negotiation in real estate investing.

Takeaways

• 🏡 The video discusses analyzing a multi-family property in Waco, Texas, as an investment opportunity.
• 💼 Brandon, the speaker, uses brildor.com and realtor.com to research property prices and details in Waco.
• 🔍 He filters the search to show only active multi-family properties, hiding those that are pending or contingent.
• 💭 The focus is on a specific property listed for $280,000, featuring a two-car garage and built in 2004.
• 💧 Brandon assumes the property has separate water meters, which is beneficial for a landlord as it means no water bill.
• 📊 He uses biggerpockets.com's rental property calculator to crunch the numbers on the potential investment.
• 💰 Initial calculations show a low cash flow and cash on cash return, not meeting Brandon's desired criteria.
• 📉 To improve the deal, Brandon considers negotiating a lower purchase price to increase the return on investment.
• 📈 The video demonstrates the importance of running the numbers and considering factors like rent, expenses, and potential appreciation.
• 📋 Brandon emphasizes the value of documenting the analysis with a PDF report for future reference or to present to lenders.

Q & A

What was the purpose of Brandon's call with the gentleman interested in Waco, Texas?

The purpose of the call was to discuss investment opportunities in Waco, Texas, specifically focusing on multi-family properties.

What website did Brandon use to look up property prices in Waco, Texas?

Brandon used brildor.com to look up property prices in Waco, Texas.

Why did Brandon decide to hide pending and contingent properties on the website?

Brandon hid pending and contingent properties to focus only on available multi-family properties in Waco, Texas.

What feature of the property caught Brandon's attention during his live analysis?

The two-car garage caught Brandon's attention as it often indicates separate water and sewer lines, which is beneficial for landlords.

What is the significance of the property being built in 2004 according to Brandon?

The significance is that it is likely a newer property, which often means the water meters are separate, allowing tenants to pay for their own water.

What tool did Brandon use to calculate the potential rental income for the property?

Brandon used rentometer.com to get quick and dirty numbers for potential rental income.

What was the average rental price for a three-bedroom property in the area according to rentometer.com?

According to rentometer.com, the average rental price for a three-bedroom property in the area was $1,350.

What assumptions did Brandon make regarding the property's expenses?

Brandon assumed that the tenants would pay for their own utilities, including water, sewer, and garbage. He also assumed that the tenants would be responsible for their own lawn care.

What was Brandon's target cash on cash return percentage for the property investment?

Brandon's target cash on cash return percentage was 12%.

How did Brandon use the BiggerPockets rental property calculator to analyze the deal?

Brandon used the BiggerPockets rental property calculator to input various assumptions about the property, such as purchase price, rental income, expenses, and loan terms, to determine the potential cash flow and return on investment.

What was the outcome of Brandon's initial analysis of the property at the asking price of $280,000?

The initial analysis showed a cash flow of $215 per month and a cash on cash return of less than 10%, which did not meet Brandon's criteria for a good deal.