Analyzing a property for profit

[Daniel Winschel]

I’m new to REI and still doing research to find my first property. Looking for a house hack. When running the numbers I am having difficulty plugging in the rent, tax, and water/sewer numbers. This is because that information is not readily available. I have looked up taxes via the county assessment but it’s not very easy to follow or maybe I just don’t understand how to read it. Do you just call the agent listed for the property on a place like Zillow to find these answers? It’s making running the numbers a big guessing game and it’s quite frustrating!

[Chris Sellers]

Daniel,

House hack is a great way to start.  I did a duplex, where I lived, for my first deal a long time ago and it was a very good learning experience (and a little profitable). 

In my experience, most agents aren't going to be helpful here (some exceptions).

You can ballpark these things after getting some data:

Rent:  use the sites  you think you're future tenant will use to find you as a landlord (Zillow, Rent.com, a big property manager in your area, Craigslist) and look for similar places in similar neighborhoods.  The rent will narrow down to a range and that's where you'll be.

Property Tax:  in most places there's a county tax + a city tax.  In Charlotte, for example, it's something like .85% for the county + .45% for the city, or 1.3%.  That means for a house the government assesses as being worth $100,000, they hit you with a $1,300 per year tax bill.   You can get this number straight from the county government website, property by property. 

Water/Sewer:  Best way to ask people a few people in the area "what's  your water bill?  how many people in  your home?".  I ballpark this number in Charlotte to be around $30 for the 1st person, +$15 per additional person.  

Insurance:  Don't forget this one.  Get a quote from your current insurance company on a property similar to what you want to buy.  In Charlotte, I usually pay around $600 for a $150k house down to $450 for a $50k house.

Do your due diligence on getting ballpark numbers, but don't sweat getting exact estimates on every property.  You'll likely run the numbers on >100 houses before buying one.  Running down these exact numbers every time will drive you mad.  

Good Luck!

Chris