rental property calculator from bigger pockets

[Joshua D.]

Is this a good property to hold? First time using rental property calculator on here just got the plus membership. So have some questions, Whats the difference between pro forma cap rate and purchase cap rate? My pro forma cap rate is 7.05% and purchase cap rate is 37.09%. Also the cash on cash ROI is 13.82% and monthly cashflow is $587.25. also the gross rent multiplier is 1.67 and income expense ratio is 1.86%(2%rule) This is the lowest return property i have. Are these good numbers?

[John Larson]

Depends. What market is it located in? What is the ARV of the property and how much will it rent for. This will tell me if it is an A, B or C class property. The numbers look pretty good to me but that only makes me think it is a property located in a more distressed area that will come with more risk. Always keep in the back of your mind the type of tenant your property will attract. Is it going to be a tenant that has a stable well paying job or a tenant that makes a lower less stable income?

I've just seen too many times where investors (even myself early in my career) was fooled by the number a spreadsheet spit out and did not take into account the higher risk that property came with. Today I prefer to only invest in homes that rent for $1,100 or more in markets with high job and population growth. This helps with keeping the property leased. If you buy homes in neighborhoods that are undesirable, that only attract irresponsible tenants, you are buying yourself an expense. My main priority is to buy properties in neighborhoods that I know I can keep leased consistently. If you cannot get your property leased with a qualified tenant and keep it occupied just go ahead and light that spreadsheet on fire.

My goal is to find properties that show positive cash flow but at the end of the day (especially if I have a loan on the property) I just want a solid tenant in the house paying my bills so I don't have to. These homes don't REALLY perform at their max potential until they are paid off. I just want a qualified tenant in there paying my bills so I don't have to.