Things to Look For When Analyzing an Operating Statement
Thursday, July 31
I've made the case that a seller provided pro forma is pretty much useless, but one shouldn't just take an operating statement at face value either. They most certainly aren't useless, in fact, they are the most important thing when it comes to valuing a prospective acquisition. That being said, ...
The Movie Every Landlord Should See
Tuesday, July 29
There is no better movie to watch to scare you straight about the risks of being a landlord (or more aptly, the risks of being an uncareful landlord) than the 1990 film . In the movie, a couple decides to stretch their income to buy the house of their dreams that also has two apartments attached ...
It Costs More and Takes Longer Than You Think
Monday, July 28
One of the most consistent problems that new investors have is that they think they can get away with rehabs on the cheap. For one thing, you pay what you get for. Don't hire some subpar contractor who pays a bunch of sketchy semi-employable people under the table to do your rehabs with a mix of ...
Staying Level-Headed on the Real Estate Rollercoaster
Sunday, July 27
Real estate has a ton of ups and downs. There aren't a lot of other businesses that can have higher highs and lower lows. If you flip a house and make $50,000, it's a high unlike any other. On the other hand, if you put months into a flip and then lose $10,000, it's hard to get much lower. And t...
When to Adjust the 50% Rule
Saturday, July 26
Unlike the 2% rule, which I think is usually a bad rule, the 50% rule is a pretty good rule of thumb. Although, first and foremost, it is nothing more than a rule of thumb. With apartments, you should look through the operating statement and construct what you think the real expenses should be ba...
The 2% Rule Paints With Far Too Big A Brush
Wednesday, July 23
The 2% rule bothers me because I think it's far too restrictive. Basically, it paints with too broad a brush. According to Gary Keller in The Millionaire Real Estate Investor, the national average rent/cost is 0.7%. Beating that three times over is not going to be easy.The problem, of course, is ...