Running The Number - as a newbie

[Mike Lopez]

Hi Everyone!

I'm starting to run the numbers in my area as practice before my first purchase (house hack).

I know LA is an expensive market and does not tend to cash flow. However, about 1/3 of the houses that I have analyzed would cash flow and I'm kinda eager to jump on this opportunity.

I want to proceed with caution because this is the first time I use the calculators. So I'm sure I'm missing something. Any assistance or guidance would be appreciated.

Thank you (and good luck on your own REI journey)

[Andy Eakes]

@Mike Lopez Which calculator are you using? While the calculators are a great tool (I personally use them like crazy), newbies tend to make the mistake of trusting the spreadsheet magic a little too much. I always try and over factor the different costs and percentages when I do a calculations because there are so many unknown, unexpected things that can happen with real estate. Plus there are a lot of other costs associated with loans, inspections, agent costs, etc. 

But don't be discouraged or paranoid by your results. You could very well be finding great properties. Especially with a number of people trying to leave LA, don't let the cliché anti-California market rhetoric turn you away. This could be a great time where you're getting in while everyone is leaving. People will always return here. The weather is too good, beaches too nice and CA properties appreciate at an insane level and the economy hear is looking up according to the latest data out there.   

If I were you, and you were willing and able to get a property right now, reach out to an agent with some good reviews and has some investment experience. Show them what you got and see what they say. The good, investment-minded agents shouldn't give you an automatic "looks good". They might be able to provide feedback for future calculations and even get you a sweet deal. 

Good luck!