The calculations seem so out of whack...what am I doing wrong???

[Alison Crawford]

What am I doing wrong? No matter the property, no matter where, no matter what...the calculator is telling me it's a bad deal. I need some advice or someone to walk me through one to see that I am doing it right.

Thanks!

[Russell Brazil]

For an expensive market like Boston you as are probably over estimating repair and cap ex costs. As you move up in price point, the percentage of the rent going to these line items will go down. 

Think about this logically. Take a $50k house in Baltimore that you need to replace a toilet in. Now take a $500k house in Boston that needs the same thing. Is the cost 10 times greater? No. So adjust repair expenses to compensate for the higher price.

Also, in an expensice market I like to focus on areas of good appreciation coupled with good rent growth. With a little patience you can end up cash flowing more than you would in a cash flow market, it just takes time. Look at how rents in Somerville and Chelsea have exploded over the last decade. 

I use that as an example though as I dont like the low quality of tenants and housing stock in Chelsea, though I have owned properties there that Ive sold in the past couple years.