Tips on Analyzing Rental Properties in the Raleigh Area

[Matthew Coffey]

Hi everyone!

I am currently a new investor in the Raleigh area looking to buy my first property in the spring. Currently I'm enrolled at NC State and am trying to get into the student rental market before the next school year rolls around. 

I've been following the market and BP for a few months now but I'm having trouble analyzing deals. I usually analyze about 2-3 deals per week using the four square method (although I'm trying to get that to one everyday) but I'm not sure how accurate my analysis is. 

Does anyone in the Raleigh area have any tips or thoughts on getting accurate analysis on properties? Specifically when it comes to estimating vacancy, repairs, and capex costs? 

Thanks in advance! 

[Christian Hansen]

Hi, it's good to analyze, but it sounds like the particular areas you are asking help with are determined by the specific property(condition, age, etc) and the area/neighborhood. Tough to know all of this from just a listing. You won't be able to know all the ages of the systems in a home and even if you do, new systems can also fail. My advice is don't get so hung up on trying to know every number, you never will and you don't need to. I would focus on making sure the deal is gonna cash flow or at least not be negative cash flow with a 15%(of gross rent) margin for CapEx but you do need to have some $ stashed in case that big expense happens on Day 5 of owning it. Put the 15% aside each month and build up a reserve and you don't have to let possible future issues deter you from pulling the trigger. Even if you lost $10K on your first deal the experience would be well worth it, that said I doubt you would if you are paying attention even a little bit. Now go buy something ;-).

Good luck.