Using BP Analysis Calculator

[Amelia Cooper]

Good Morning! 

I am analyzing my first deal and either it's a really terrible deal (it isn't, at least not to the extent the calculator shows where my expenses increase and my equity decreases over time) or I am not using it right. I DID watch the video on it. What other resources are out there to help me understand how this works? 

Also, what is all this "back of the envelope" math I hear about? I've heard our BP experts talk about being able to analyze a deal in 5 minutes, but how can they do that when we are supposed to call around and get information like insurance quotes in our deal analysis? What am I missing? 

[Nicholas L.]

@Amelia Cooper

'back of the envelope' would mean using rules or guesses instead of actual numbers.  so, 50% of the rent will go toward non-financing expenses and costs: that's back of the envelope.  you would never buy based on that - but you might disqualify a deal that way.

and yes, having actual numbers is best, and possible!  you can usually find out the actual taxes, get an actual insurance quote, estimate the utilities pretty closely, etc.

here's an example of something you might learn and then re-use over and over.  in my market, the utilities aren't usually totally split in many small multi, so i know i need to account for them - often sewer and water - in my numbers.  typically $80-120 depending on the property.

another example - say you got an actual insurance quote for a 3 bed 1 bath single family in good shape.  well, you could re-use that for future similar properties.

other resources: this forum.  ask away.