Automate finding of good deals.

[Roman Ripp]

Hello,

I have only theoretical experience in real estate, but a lot in software development. I want to automate a process of finding good deals. 
As a first step, I want to make sure I got my math right. Basically what I do, is I look at its purchase price, rent, and expenses such as taxes, maintenance, etc. As a result, I want to know the monthly cash flow, deal, and investment sum. 

I would like someone with experience in purchasing / owning cash flowing properties to look at my analysis and give me suggestions, where I did mistakes. 

As a bonus, maybe you will find a good deal using my tool, or I can set up something that fits your search better. 

Here is the link to the analysis files: https://drive.google.com/drive/folders/17BAS0r-Run...

Basically, it is a google drive folder, with many spreadsheets describing properties in the region I want to invest in. Minneapolis-St Paul area. 

The title has:
- cash flow value: how much property will earn per month.
- deal: indicates if the property is cheaper or more expensive then other properties in this area.  

- how much money I will need to invest. 

If you open any of the files, inside you can see more details about what I use to calculate cash flow. Also, there is an address and a zillow link to the property. And this is where I could use some help. Are my calculation of cash flow match your estimates? 

Thanks. 

[Dominic Scheck]

Hi, Roman. Thanks for posting. We need more data, more data sharing, and more automation like this. So first, kudos. 
Now, a math check might involve validating (1) your assumed values, (2) that you're focusing on the evaluation metrics that matter to you, and (3) the calculation method for going from assumption inputs to your evaluations outputs.

1. Assumptions

• What is Home Price? It looks like Market Value is the list price on Zillow. But for example, on 1108 45th Ave, you have $143,018 for a house price when it's listed for $200,000. If you can buy a house for 143 and sell it for 200 without doing any work, then you've got yourself a deal already.
• Many lenders want a 25% down payment if you aren't living in the house. Maybe you have an exceptional one.
• $100/month might not be enough for maintenance, especially for older houses. I plan for $200/unit in multifamily, and I'd probably budget more for these single-family homes.
• Maybe double-check your property tax amount. If possible, pull directly from the county records.
• Looks like you're planning $0 for utilities and snow/lawn. Cool for single-family.

2. Evaluation metrics

• Cashflow: awesome. 
• Looks like C19 is cash-on-cash return. Cool.
• How are you thinking about Deal? C20 looks like a calculation as if you were going to wholesale it or flip it with no rehab. That brings me to the big question.
• How do you want to invest? That will determine what evaluation metrics matter to you and what makes "a good deal." If you want to buy-and-hold-and-never-sell while maximizing the % return on your money, then you should prioritize the CoC return. If you're busy outside of real estate, maybe deal capacity is a constrained resource; then the cashflow per deal might matter more than the CoC return (e.g., if you can only buy 1 deal/year, then a $400 cashflow/9% return deal might be better than a $100 cashflow/15% return deal). If you plan on renting a place for 5 years and then selling, I'd add neighborhood-specific appreciation assumptions and assess deals on internal rate of return (IRR). If you're planning to wholesale, then you have a tougher job of estimating the measures that matter to your end buyers (likely likely ARV and repair costs in addition to the ones above). Accurate repair costs are probably tough to automate, but if you build an app that does it, you'll be able to retire on any beach without buying a single house.

3. Calculation Methods

Look good to me.