How are you personally analyzing your properties year to year?

Question

I'm taking a little bit of a break this year to focus on scaling, streamlining and re-strategizing going forward. Part of my plan is to better track my existing portfolio. I may plan to pivot to a different area in the future.

My properties are all property managed so I get the monthly and annual statements from them. I'm considering taking the numbers from there (they do calculate cashflow, % vacancy, % repairs and all that) and making spreadsheets with graphs/charts so I can track everything on a property by property basis and the portfolio as a whole.

I also want to plan exit strategies when the return on equity gets low. I track everything at the "buy" on a spreadsheet as far as income, expenses, CoC return, ROI and have another spreadsheet to estimate and track all rehab costs. I track everything tax related as well.

I'm planning to have ROI, rents, cashflow, expenses, debt service, repairs/maintenance, return on equity, appreciation (I think this works over the long-term, kind of hard to predict in the short term especially with what we've seen in the last few years, but I usually conservatively estimate this anyway at 2%) and return on equity. Probably need to run some IRR numbers with different sales possibilities as well.

How do you all personally track your properties? My portfolio is still relatively small so I can input this info manually, I think it would take me maybe a couple hours at the end of the month.

Anything else special you track that helps analyze your properties? Payback period? When the best time to sell is (when return on equity gets below a certain point consistently?)

Nathan Gesner · Answer

I don't crunch numbers much. I know there are valid reasons for it (e.g. ROE), but I don't really care because I plan to hold everything forever, anyway.

Go to etsy and search for real estate investment or something similar. You will find hundreds of spreadsheets already built, usually available for less than $10.

Example: https://www.etsy.com/listing/1220746871/rental-property-roi-...

Chris Lopez · Answer

@Jeremy H.Great questions here! I initially focused on optimizing and growing my portfolio, which grew into helping many of my investors here in Denver.1) Do a full annual review of your portfolio - Portfolio AnalysisYou don't need real time tracking month to month. Once a year, gather all the data for the past year and then review. Get current market rent and current property value. It gives you a snapshot of how everything is performing. Here's my 5 step plan:

• 1) Review & realign goals - Our RE portfolio is the vehicle for getting us there. Make sure your portfolio and goals align.
• 2) Global real estate portfolio review - Look at all your properties and investments combined. Like a unified stock tracker.
• 3) Analyze individual investments - dive into each property. How is it performing? Would you buy this rental again today?
• 4) Model Scenarios to Explore Opportunities - WHAT IF scenarios! This is my favorite. Explore other investments and scenarios. What's the opportunity cost with the current equity?
• 5) Create / update your portfolio architecture action plan - Write it down.2) Focus on your return on equityThe "Buy" spreadsheets and numbers become less relevant every year. Example:I bought a condo for 0% down. I was making an infinite return on my investment. "Why would I ever sell?" Was my original thought.Fast forward 5 years and now I had $200,000 in equity between market appreciation and principal pay down. The $200k is real and now has an opportunity cost. I'm no longer making an infinite return.I sold and did a 1031 exchange into a Fourplex in Denver.BiggerPockets Video - I'm one of the educators on BP's YouTube channel. I released a video in December that will be a great resource. DM if you want the link. 
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Caitlin Logue · Answer

You can use a spreadsheet to track, but it is very inefficient. You need software that does the work for you and that can also easily run different financial scenarios. I recommend ROE should be top of mind when evaluating the numbers.

Thomas Talbert · Answer

What I always like to calculate specifically for rentals is maintenance. That may seem obvious but in my experience, 99% of ongoing maintenance issues are because the property is old and needs either a large cash infusion to make them go away or what I like to do is 1031 exchange into something newer that requires less work.  I have far too many clients who hold onto 40-year-old assets and take all the deferred maintenance on the chin for years.

I don't think I have an exact formula for this but its math I find myself crunching in my head a lot. Certainly if you don't have any cash reserves.

How are you personally analyzing your properties year to year?

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