Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 54%
$32.50 /mo
$390 billed annualy
MONTHLY
$69 /mo
billed monthly
7 day free trial. Cancel anytime
×
Take Your Forum Experience
to the Next Level
Create a free account and join over 3 million investors sharing
their journeys and helping each other succeed.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
Already a member?  Login here
Houston Real Estate Forum
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated about 8 years ago on . Most recent reply

User Stats

16
Posts
5
Votes
Jesal Shah
  • Richmond, TX
5
Votes |
16
Posts

SF evaluation - What am I doing wrong?

Jesal Shah
  • Richmond, TX
Posted

Hello Everyone,

I am new to BP and looking to make my 1st investment in Houston area. I evaluated few properties but numbers don't work out. Not sure if I am doing something wrong or it's just hard to find good deals in Houston market. I have posted an example of typical deals that I have been evaluating. I will really appreciate any feedback you can provide. Please help.

Thanks in advance.

1) Purchase price: $120,000

2) Expected Rent: $1100/mo 

3) Property Taxes: $300/mo 

4) Mortgage with 25% down @ 5% interest: $483.14/mo

5) Other expenses (insurance, HOA, Vacancy, CapEx, Maint etc.): $100+$25+$100+$100+$50 = $ 375

6) Total expenses with mortgage, tax, others = $1158 (vs. total income of $1100).

7) Above yields negative cash flow. All the properties I evaluated (northwest houston) so far result in -ve cash flow.  :-(

I thought above numbers are very realistic (actually i am thinking my expenses are underestimated). I am sure people are finding deals in Houston area and making investments. So what am I doing wrong? Is my evaluation method flawed? Should I be looking elsewhere?

Most Popular Reply

User Stats

243
Posts
203
Votes
Kevin Coggins
  • Spring, TX
203
Votes |
243
Posts
Kevin Coggins
  • Spring, TX
Replied

@Jesal Shah From the analysis I've done, in order to get anywhere near a decent cash flow, you need to be getting at least 1.5% of the ARV. The 1% rule just doesn't work here, especially when property taxes range between 2.6-3.7% depending on the area. And 1.5% is basically the minimum, if you want any sort of cushion you really need to be looking for 2%.

Loading replies...