[Calc Review] Help me analyze what I am doing wrong

[Steven O'Hare]

Consider this property being a new build Duplex in San Antonio , ten year warranty so no real huge cost for repairs in the first ten years so to equal numbers out I am keeping cost zero for simplicity sake , I will have reserves saving up ultimately but trying to keep it close to what my realtor is using on his numbers.

So I am trying to understand how my real estate agent comes up with vastly different returns then the calculator does...looking for advice on what I am missing,  

He shows 14.65% return which he calls “ Return on initial investment year one” 

...cash flow before tax= 4258 roughly 5.18%

+ appreciation at a conservative 1,5% appreciation $4572 yields 5.56% 

+ Pricipal reduction on loan $3223 a 3.92% gain 

= totalling 14.65% Gain.

Vastly different than this calculation I did on bigger pockets 

View report

*This link comes directly from our calculators, based on information input by the member who posted.

Really appreciate the help!

[Rick Pozos]

Hey @Steven O'Hare you have to realize that someone is trying to SELL you something. Ask him what his expense numbers are that he is using. That is where you will find the difference.

I can tell you though, when something is that far from the 1% rule, you are out on a ledge. All it takes is rents going down just a little or some vacancy because of the property manager and you will have to start digging into your pockets. 300k for a duplex even if it is new build is a bunch of money to pay in SA. Purchase price of $117 per sf is probably just over retail price. You are just buying along with the retail crowd.