Estimating Income & Appreciation Growth for analyzing deals

[Saurabh Shirolkar]

Hi!

I am a newbie and looking to find my 1st real estate investment. Looking for Single Family Homes to use as rentals and employ Buy and Hold strategy. Looking in the Kyle/Buda areas near South of Austin and also the San Antonio area. I have a real estate agent who is shortlisting deals for me based on my criteria ( 3BD/2Bath, $400K)

The question i have is related to analyzing deals. How do i go about estimating Annual Rental Income growth and Annual appreciation for the deal analysis? Any resources i can use that experienced investors here use? I am using the Rent Estimator and Rental Property Analyzer on the Bigger Pockets website. The issue I am having is that every deal i have analyzed so far looks to be terrible in terms on CoC ROI, monthly cashflow ( -7% to -10%) and also Annualized overall return ( negative in short term and < 10% over 20 year horizon). My observation is it is heavily reliant on the assumptions for annual income growth and appreciation and can make /break a deal analysis. The Bigger Pockets Analyzer uses 2% as a default for both and i would think the above areas grow more then 2% in annual rental income and appreciation. My fear is i may pass up on a deal that might be worth pursuing

[Aaron Gordy]

@Saurabh Shirolkar Your real estate agent should be a solid guidance on whether or not a particular property is a good rental. There are areas that the rents are increasing substantially. There could be ways to add value as well. There are some submarkets where the property taxes and/or hoa's are relatively high compared to others. Your real estate agent needs to work a little harder, imo.