ANALYZE A RENTAL PROPERTY EASILY

Analyzing a property shouldn’t be that difficult. You can do that by figuring out the Cash Flow, CAP Rate, and Cash on Cash, or by figuring out all three. You can do this within minutes and decide if this is a good investment based of your goals and wants.

Step 1:

Know the Purchase Price, Money you need to close (closing cost, down payment, etc)

Step 2:

Figure out monthly rent, expenses, and mortgage.

With step 1 and 2 you can figure out your cash flow, CAP Rate, and Cash on Cash return.

Step 3:

Cash Flow:

Monthly Income (Monthly Rent) – Expenses and Mortgage

Step 4:

CAP Rate:

Annual NOI ( Annual Cash Flow + Annual Mortgage) / Purchase Price

Step 5:

Cash on Cash:

Annual Net Income / Cash invested (cash to close)

In closing you need to decide you what your goals are and what kind of number do you want to achieve. Everybody has different goals some people want to get $100 a door for their cash flow and others want $200 a door for their cash flow. Same goes for Cap Rate and Cash on Cash returns.

Good Luck and Keep Investing