Getting Accurate Numbers For Investing

[Brandon Terrazas]

I have heard more times that I can count that to be successful in real estate you need to run the numbers and only invest in properties where the numbers make sense. In theory I get that. But it seems that running the numbers is the easy part. 

The difficult part is getting accurate numbers. That leads me to my question. How do you know that your numbers are accurate? How do you know that the property taxes won't go up? How do you know that the amount that you can rent the property for is accurate? Sure you can ask a property manager what they can rent the property out for but there is no guarantee that number they give you is accurate. They could be mistaken or just lying to you so you will hire them. 

I appreciate you thoughts on this matter.

Brandon  

[Anthony King]

@Brandon Terrazas @Brandon Terrazas you really have to know the area and I'm not just talking the city, but different neighborhoods and down to the streets within those neighnorhoods. You have to analyze 50-100+ properties in any given area, talk to different realtors, lenders, contractors, property managers, fellow investors, etc, and read everything you can about the neighborhoods you are trying to buy in. Rentcast.io is great. Rentometer.com is useful, and the dealcheck app along with BP rent estimates. All useful to get you in the ballpark for rent estimates but familiarity with your area is key.

For expenses don't lie to yourself. Things break in every home and usually twice as fast in a rental. Take note of their condition at purchase and use 5-10% for maint and capex accordingly. If you really want to gnat's *** it, figure the remaining life on all your capex items and set aside a monthly amount for each item. (Ex. - you determine a new roof for the house you bought would be $10k if you had to replace it today. You also determine it is 10 yrs old and you have 20yrs remaining before you need to replace. Therefore you must set aside $500/yr to have the $10k saved up plus whatever inflation increases, etc) Do this for your furnace, HWT, HVAC, etc. Be conservative and if the numbers still meet your minimum threshold, then you'll likely be pleasantly surprised when your real numbers come in.

Taxes - ugh, wish I had a good answer for this, but I hate the government and always expect my taxes to go up indefinitely. It's hard to find accurate info, but plan for an increase based on sales price at some point after your purchase.