How to Evaluate a Investment Property

[Stephanie Knox]

Hey everyone, so I'm in the very beginning stages of REI. I've been reading about how to screen tenants, how to set up procedures and systems, etc. but the one area that I'm having problems getting a grasp on is the numbers side of investing. Math has never been a strong point of mine but it's the most important aspect of investing of course! So I was wonder if anyone has any books that they can recommend that explains and breaks down how to really evaluate an investment property?

I'm looking to invest in 2-4 units properties using buy and hold method. I already purchased "What Every Real Estate Investor Should Know About Cash Flow" and reading it now but would like to get more books on this. 

[Jeremy P.]

I believe @Stephanie Knox is asking what numbers to specifically look for when working the Analysis.

It is easy to say make sure the numbers are correct, but what numbers?

When I started analyzing deals 2 weeks ago (and I just started 2 weeks ago) I thought 1-3% COC (Cash on Cash ROI) and $100 - $200 Monthly Cashflow was good.

After watching a few Webinars (Replays located in the Pro section) @Brandon Turner mentions he looks for minimum 12% COC and $400 Monthly Cashflow, He always does an analysis in the Webinars

You can also review the The Best Beginner’s Real Estate Investing Course Online

Here is the specific course on The BiggerPockets Property Analysis Software

It's hard to say what numbers specifically work for you, but with Brandon's advice I know now what to look for to make sure:

• Get good Cashflow
• Expenses, Repairs are covered
• Mortgage, Property Tax is covered
• CapEx, Vacancies is covered

Definitely don't skip out on the expenses, CapEx, Vacancies, if you don't know how much property managers cost call around and see what they charge.

I called 6 before I found one with a flat $100 fee per month to manage the property. All others charged 10% of rents.

You should also hit your Local REI club, network and ask for more detail numbers for your area. Like Vacancies.