Help with Bigger Pockets Rental Calculator

[Kendrick Pratt]

Hey y'all,

Can someone help me understand the bigger pockets rental calculator in more depth? Every time I analyze a deal, I always get a negative cashflow return, which seems odd to me. I can imagine that after analyzing over 20 deals that every single one of them, is bad. 

Maybe, maybe not, but I would really appreciate help on it. 

I am looking at multi-family deals and have an off-market deal, I just need to double triple check my numbers. 

Thanks 

Kendrick Pratt

[Paul Koenig]

Hi Kendrick, I always see a ton of "calling all investors" type MFH listings for sale.  They are generally all not very good.  BR mentioned in one of his videos that you need to just keep analyzing deals every day and you'll start to see the good ones.  When I first started with BP I did that, and had an easy Excel sheet you can just input a couple key numbers into and it does the rest.

The quick 1% rule will tell you alot: Rental Income divided by Price.  If your result is under 1%, run.  If it's over 1%, it will make very little money.  Over 2% it should be decent cashflow.

For example: $2,000 rental income / $250,000 property price=.8%  Your expenses (unless you pay all cash) will be in the neighborhood of $2,200 and your income is only $2K.

To your point, most advertised deals stink, unless your willing to accept a low single digit return.