All Forum Posts by: Nick Peters

Call me old school (I'm not that old though) but I would strongly recommend you not to drop out, especially after only one sale. Not saying you can't make it your full time job but I would definitely try to do both for a bit and see how it goes.

Amazing performance, great job Elenis!

Agreed. Your assumptions regarding your expenses are underestimated to say the least. Have a look at some BP articles that discuss operating expenses, they provide great info on averages to use for estimates / forecasts.

Welcome Ben and good luck!

Welcome aboard John. You're lucky to be living in the Raleigh area because the region continues to be a great place for real estate investors. Best way to start finding deals is reviewing (online as a start) as much properties as possible to get a sense of the market, and connect with other investors / professionals that can assist you in your search.

Welcome Rashard, and good luck on your journey!

Congratulations, that's an achievement! What enabled you to be so ahead of your initial schedule?

In addition to using the online calculator, you can also download multiple spreadsheets in the Real Estate File Place of BP: 

https://www.biggerpockets.com/files

I'm obviously biased, but I've always found spreadsheets much more meaningful and detailed.

Originally posted by @Marc Brenner:

Hey @Joe Dupa, this isn't enough info to really tell how good of a deal it is. I can tell you if your mortgage is $1300 and your rent is $1800, your cash flow will not be $500/month. You need to account for insurance, repairs, cap ex, vacancy, and property management (unless you will self-manage). Where is the property located and what was the purchase price?

 Marc's remark is very important here. You need to account for all expenses related to your property, not just your mortgage. It's hard to give you a more detailed assessment without more information (is your mortgage over 30 years btw?)

A $1,300 mortgage payment over 30 years represents a loan amount of ~$360k (assuming a interest rate of 3.5%). If you put $95k down, it means the total purchase price is ~$455k approximately. Using a very approximative rule of thumb regarding expenses (i.e. that expenses will represent ~50% of your rent), I can tell you that $1,800 won't make you cash flow positive, far from it unfortunately. Then again, you need to account for the location. Properties from top locations in top cities are very rarely cash flow positive.

I'll +1 what Taylor said. More complex financial ratios usually offer a much more meaningful result when analyzing real estate deals. The king in the category is clearly the internal rate of return (IRR) which takes into account cash flow, appreciation, debt repayment, leverage, etc. over the life of the investment. It's more complicated to calculate (can't be done by hand) but it can easily be done with an excel spreadsheet. A lot of good articles online will explain you the concept of IRR and the pros and cons versus traditional ratios (cap rate, cash on cash, etc).