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Updated over 6 years ago on .

User Stats

4
Posts
1
Votes
Miguel Rivera
  • Property Manager
  • Aurora, IL
1
Votes |
4
Posts

BP 4 Square rental analysis method question

Miguel Rivera
  • Property Manager
  • Aurora, IL
Posted

Hello, I'm new to the forum and this is my first post. I got my real estate license a bit over a year ago. Most of my motive behind being an active real estate investor was influenced heavily by my father being a retired licensed agent and current active investor doing quiet well for himself with his passive income. I bought my first rental residential home late last year, in December 2017. The home is in the same area in which I grew up an know quiet well.  I managed to get a tenant moved in quest fast and while the house was still being worked on.  Before buying I did no analysis of the home ( I did not know how) , rather my father and I made an educated decision as to weather or not its a good deal. Here is my question......

I did the BP 4 square method to calculate cash on cash ROI exactly as BP explains and the house is performing with a 14.79% cash on cash ROI. The taxes went up on my house and my escrow account had a shortage of $1,852.78, which I paid to the bank and this resulted in my monthly mortgage payment to go up by $100 a month. I ran the same analysis again with updated numbers and now my cash on cash ROI dropped to 8.74%. Do I keep re analyzing the deal every time I happen to put more money into the house like the $1,852.78 that I had to pay the bank or for example if something break and I have to dump money into the house to fix it? Will I continue to have to do another analysis to get an updated cash on cash ROI ?