I give in, explain it to my like I'm 5

[Account Closed]

I'm a new investor, I haven't purchased a property yet, first time post. I would like to start out in SFH rentals and move into multifamily, eventually going bigger. I'm looking for cash flow, planning for generational wealth. I have a about 40k saved up, an investor willing to give me a shot, a list of homes I want to send direct mail. I have a few houses I've been watching on the MLS. I've taken a few finding deals and wholesaling courses. I've been reading books, blogs, post, listening to podcast, watching webinars, even tried to play with the calculators. And I still don't understand analyzing deals. I get to the numbers and it's foreign, I can't comprehend it. I've avoided posting because I feel so dumb not being able to understand it. This is the only thing holding me back, I would be unstoppable if I could just figure this out! Is there any where I can go or anyone that can be recommend that I can talk to? I'm not asking for a mentor, just someone that I could speak to, hear their voice and be able to ask questions. (If I find a mentor I wouldn't complain.) Also are there people willing to link up with others to do a deal together so they profit too?

[J Scott]

https://www.biggerpockets.com/...

[Damaso Bautista]

 @Account Closed

Hey Tracy Welcome! 

Bigger Pockets video on you tube titled "Calculating numbers on a rental property using the four square method" 

This is a very simple and easy explanation of how to run the numbers on a rental property.  Watch that video and if you still have questions you can pm me and I will be happy to answer any question you have.

Happy Watching!

[Michael Plante]

This is the second time in as many days I’ve seen a new member say they want generational wealth. 

What does that mean to you 

Where did you hear of that

[Theresa Harris]

Don't feel dumb.  Start by filling in the basic costs: rental income, mortgage payments, property taxes, insurance.  Are you managing it or having a property manager do it?

[Matthew Irish-Jones]

@Tracy L.

Everyone has been here. It’s tough to understand if something is a good deal or not if you don’t have any bench marks set up.

You should work with an investor focused agent to set up some benchmarks. If you can’t find a reliable agent you can do it yourself.

For example: we know single family homes in certain areas will have about a 7% cash on cash return.

So if we are in that area analyzing a property and we find a property with a 12% return we know we have on paper what looks like a good deal.

There are quite a few aspects of finding a good deal.

The numbers are one but, so are location and asset condition.

We generally break down areas into A,B,C,D class areas.

Our expected returns are different for each area. In s

D area we can get 18% + Returns but they come with a lot of risk.

If you want to cut through all the terminology just set up a standard profit and loss by month for the property.

Income - expenses and debt service.

After you have analyzed a bunch of properties and compared them to each other you will start to develop benchmarks and an internal sense of value.

Don’t worry too much, everyone started where you are at some point. Nobody was born knowing how to analyze investment properties, and how to find a good deal.

[Matt Leber]

@Tracy L. Using round numbers; You buy a house for $100k that rents for $1250 per month. The bank lends you 80% of the $100k you need. They charge you $650 per month for 30 years to pay back the $80k you owe plus interest, property taxes and homeowners insurance. You decide to put aside $250 per month for any unexpected future repairs or vacancies.

$1250 (rent) - $650 (PITI) - $250 (reserves) = $350 (cash flow per month).

[Matt Ziegler]

Tracy,

We were all new once, and we are all still learning. Feel free to reach out if you want someone to bounce ideas/ deals off of. Let us know if we can help.

Enjoy the journey

[Derrick Dill]

Most basically:

You buy house that rents for 1000$. Mortgage for house is 700$. It's cash flowing 300$/month. 

You can add in all the repairs, vacancies, etc. after you get the most basic understanding

[Tim Delaney]

@Tracy L. Welcome! I would suggest plugging in numbers into the BP calculators. I see that you are a Pro member so there is no limit on how many times you use the calculators. When you come to a term you don’t know Google it or search in BP for it. After you’ve used the calculator to put in a bunch of deals start comparing the numbers of the different deals like Cash Flow, Return on Investment, and any other metric that is important to you.

Happy to help talk you through a couple as well - shoot me a message.

[Evan Polaski]

@Account Closed, unfortunately (having a 5 year old) that is not possible.  :)

It is all very basic math.  Since you are in the flipping forum: purchase price + rehab costs = total investment.  Sale price - total investment = profit (or loss)

EDIT:  Moderator (J Scott) accidentally edited this post and removed some information that can't be retrieved.  Sincerely apologies to the poster!