Investment profit analysis

[Goredy Tess]

Hello ALL,

Its been 2weeks since I have joined this forum, I am doing a lot of analysis on several properties, but every property gives me an COC negative value, negative cash flow but the ROI 33%.

I am giving 10% for each of the following entries (Repairs & maintenance, Vacancy, Capital expenditures, Management fees). 

Is there something that I nee to change or I am just selecting the wrong property?

Greatly appreciate and Thank you !!!

[Russell Brazil]

Quote from @Goredy Tess:

@Russell Brazil,

Lol, I do agree with with the fictions expense, but, that's what I keep hearing that you have to have $ allocated for those expense.

what would be the analysis that someone with your experience would do for this property analysis?

Thank you

 I look at what my free cash flow would be with 25% down and see if that is a number that would likely cover my other expenses.  I also look at what the likely rent growth and asset price growth Im likely to get on the particular asset and location.

Just as an example, I have a property in Rockville that when I bought it had a PITI of $1700 and a rent of $1900, I paid $290k for in 2010. So it had free cash flow of just $200 per month. Today it has a PITI of $1300 a month (Refinance lowered payment) and rent of $3300 per month, so my free cash flow is now $2,000 per month. Additionally the value of the property today is about $565k, approaching $300k higher than I paid 12 years ago.

If I only focused on that $200 free cash flow when I bought it, I wouldnt be making the $24k per year in free cash flow Ive been getting, nor have the $350k in equity I have in it today.