All Forum Posts by: Jimmy Chin

Cap ex = Capital expenditures. Those would be your big ticket items like the roof, a/c systems, etc. There's a blog here that explains these expenses in great detail that you might want to read up on: http://www.biggerpockets.com/renewsblog/2014/09/28/analyze-rental-properties/

@Ed Neuhaus There are definitely a lot of properties in Houston under 125k but I'm not really seeing much that cashflow in the 400-500/month range after taking into account vacancy/op ex/cap ex/PM (correct me if I'm wrong). Does it make much sense to acquire a property under 125k if the cash flow is good even if the price of the property is just a tad under market price (ie. not a killer deal)? The Houston market doesn't seem to fluctuate much so apart from the cashflow, I don't really see much gains in way of appreciation.

@Sharon Tzib Thanks for the info. I meant to ask if the tenant would be paying for water/sewer on a SFH and you just answered my question!

@Ray A. The insurance you quoted made a huge difference. This exercise definitely showed me how important it is to get the cash flow numbers right. Oh yea, next time I'll get my own numbers and not rely on sites like zillow.

@Iman Yu Oh yea, completely forgot about the HOA! Just another thing to eat into the cash flow. Thanks!

Thanks for all the responses! I double checked the monthly insurance and it did make a huge difference in the cashflow. I was looking at the property on zillow and it gave me $396/month as the estimate for insurance so I used that in my calculations without even thinking. I've learned my lesson to not trust zillow's estimates! 

The resulting cashflow is still not ideal, however, at least I'm getting a better estimate than I was before and I don't end up eliminating viable investment properties. I'll tweak the vacancy, repairs, cap exp, and mgmt numbers but I didn't want to under compensate for expenses. Thanks again guys for all the advice!

Hi all,

I'm new to real estate investing and am practicing doing some deal analysis. I need help running numbers on a sample property as my results do not look/feel right (getting negative cashflow). I'm pretty sure my data is wrong but I can't seem to figure what it is. I tried doing the same type of analysis for multiple properties and keep getting negative cashflows.

Address: 11903 Fork Creek Dr, Houston TX 77065

Purchase price: $110,000 (asking $128,000)

Loan type: 30yr @ 4% fixed

Cash needed = $22,000 (20% downpayment) + $5000 closing = $27,000

Monthly rent = $1,350

Property taxes: $209/month

Insurance: $396/month

Other expenses (water, sewage, etc): $100

Vacancy/repairs/cap expenditures/prop mgmt: 5/5/5/10

Result = $1,350 (rent) - $1,425 (total expenses) = -$75.02 cashflow (??)

Where am I going wrong here? Or am I correct and this is a negative cashflow property? I'd appreciate any insight!

Thanks for the great thread here. There are some very good insights and it has been tremendously valuable to hear from seasoned investors. I've been looking at properties such as these as well for my first investment, however, I am very hesitant to take on something with such high maintenance and vacancy rate. I would hate for a property like this to turn me away from REI! Good luck @Iman Yu and do let us know if you decide to invest in these properties and how it works out.

So sorry to hear what happened to you. Thanks for sharing so that new investors like me know what to watch out for. Hope you fare better next time! 

Great post. Thanks for sharing and congrats!! 

Thanks Ehab, I just wanted to let you know that your post is what inspired me to join the BP community and get started in real estate investment!

Hello BP community, it's great to be here! I'm 35 years old and currently am a Software Developer working in Houston, TX. I was in the process of looking for a new home and thought about renting out my old home which led to me stumbling onto BP.

I started reading up some of the articles, some member postings, and also listening to some podcasts and I have to say that I am excited at the possibilities of real estate investing! The problem with stumbling on this site though is that I would now rather use the down payment reserved for my new home to purchase an investment property and stay at my current house - the wife will NOT be happy! What to do?!?

In any case, I'm hoping to learn as much as I can here before jumping into the pool. My current goal is to start investing beginning in January 2016 so that gives me some time to learn about the business and lingo. Other than wanting to invest in rental property, I'm still trying to define what realistic goals would be for me and my financial situation. I would greatly appreciate any starter advice from those who know the Houston market and surrounding areas! 

Thanks!