Caption transcript. This text is pulled from YouTube captions and may contain minor wording errors.
[00:00] hey I wanted to record this video to show you how to use this investment property calculator there are a lot of calculators out there um Bigger Pockets as one but I have found that there aren't a lot of good ones out there that are that are simple to use where you can just download them and know exactly how
[00:15] to use it and this one actually might still fall in that category for for some people who are just not familiar but I really do think this is very easy to use and let me show you how to do that so here you can see the address the city the bedrooms bathrooms square footage uh none of this really matters
[00:37] for the calculations so you don't really have to enter any of this in even this um you know this is mostly just for you to put in here um it doesn't really change any of the numbers um however I actually will say the square footage if you go down to the rehab estimator a lot of the per square foot items here are
[00:59] actually u based off of the square footage um and I think if I recall some of the bedrooms and bathrooms but anyway the uh main here's really all the blue fields are the input um Fields so like projected rent type it in the monthly don't type it in
[01:19] the annual cuz the annual gets calculated off the monthly uh vacancy is just left at five you can change that to whatever you want purchase price um so fairly self-explanatory the purchase price is what you end up buying the property for so it's your contract price uh after all your negotiations uh budget
[01:38] rehab um self-explanatory do you think it's going to be $30,000 worth of work or zero if is it if if it's turn key the arv is the after repair value so what do you think the property is going to be worth and uh if you're doing a Cash out refinance um then this is important because this is actually what your
[01:58] property taxes and Insurance are going to be based off of it's the after repair value now if you're buying turn key your purchase price and your arv are going to be the same number so just type those in the same if it's turn key financing pretty simple um pick where you're at uh I don't have all the options in the
[02:16] world you know but I mean this is most this is probably 90 99% of them uh interest rate what is your estimated interest rate you're going to be getting from your from your uh from your lender uh L term you can change this to 15 but I mean most people are doing 30 to
[02:35] leverage uh properly and uh this is kind of experimental the whole cash out refi SL bur calculator I have tested this against Bigger Pockets um which Bigger Pockets calculator is very good for this but it is also kind of cumbersome it takes a lot of time to go through and uh type in all the fields and all this and
[02:56] that um it's probably more accurate um and more precise with like you know typing in um your holding expenses your Electrical uh your your utilities all this stuff but uh if you're doing it something if you need something really quick you actually don't really have to touch this at all I gets automatically
[03:17] calculated uh whatever you type in here ju doesn't just calculate uh your returns as a rental but it also automatically inputs you just have to type in are you so what this is this is the only thing you have to do do you want to leave in 60% of the limit to value
[03:38] or or are you doing 75 or 80 and a lot of this depends on what's even allowed by your your lender um but what this equates to is there's 30% of your Equity stuck in the deal and you can pull the rest out all right let's go back up here though to the uh the cash flow and the
[03:59] Opera expenses and I'll type in a sample deal so you can see how it works so I'm going to type in 1 2 3 Main Street oops we'll do uh Tampa Florida and we're going to do a single family rental and let's just say it's a three oops I always do that three
[04:22] bedroom two bath zero half baths and uh let's just say it's like 1350 sare ft now I would expect this to be around 305 um something like that projector rents about 2300 uh this is just going to be off of we'll see this is Turn Key this is going
[04:45] to be off of today's like as of what January 2024 uh closing costs are calculated at about what was it 1 and 12% of your purchase price we'll do 20% down vacancy calculates at $115 a month out of the 2300 rent and uh let's go down to make sure we have
[05:10] everything else properly typed in let's say your interest rate is like 88.1% uh your property management fee um none is if you're self-managing uh 8 n and 10 are common Property Management fees depending on the property manager you're going with and then these are for long-term rentals
[05:29] eight nine and 10 um just because you're paying more if you're paying 10 doesn't mean you have you're paying too much it just means that you have a really good property manager hopefully uh 8% could be you're saving a lot of money or maybe you have a bad property manager so it can go both ways uh your utilities or
[05:47] others so this could be your HOA fee your Landscaping kind of lump everything into this one category um in the future it might split it out into two but like uh if you're paying for lawn care if you're paying for utilities if you're paying for HOA fee monthly uh just combine this all into this field so for
[06:04] long-term rentals uh for a single family house you're not going to be paying for the lawn care the tenant will be doing that um this property does not have a pool so there's no pool maintenance generally homeowner or landlords will want to pay for the pool maintenance to ensure that it is being
[06:22] done and the attendant also paying for utilities so in this case you have zero in this field maintenance and cap we'll say since it's TurnKey maybe we can reduce this to like 6% um in this hypothetical property uh so we will scroll up and see that our returns are 500 a month I know it's not a very good
[06:46] looking property um but that's kind of what that's just what this is now in this situation this is turn key so this this whole field is kind of pointless uh just ignore it if you go to the rehab estimator again for this example not a good one um you don't really need to do anything here um this is just kind of
[07:04] giv giving you an idea of what things cost um here is the investor property analysis and uh you can see just a different way a chart a different way of looking at the numbers uh your monthly expenses versus your growth uh gross monthly income and uh overtime so this is what I like because if we look at an
[07:28] increase of about 3% a year and some areas could even have 7% some may have one or two uh you know you're going to be increasing Equity year over-year uh you can see how these numbers slowly trickle up and uh by year uh 10 this property is Cash flowing well probably by year eight seven or eight it's cash
[07:50] flowing positive and uh the equity just keeps going up here is the monthly layout and so this is a little bit different again a different way of looking at the numbers shows you the uh gross monthly rent uh month by month and the the uh vacancy rent L less vacancy and then kind of
[08:10] where all of your your expenses are going each and every month lastly this page is the howto um but I'm making this video because this isn't super helpful um it is a little bit but a more in-depth is uh explanation is is why you're watching this video so now let's do a uh let's do
[08:31] a pad split property uh let's just say these are the it's the exact same property what we're going to do is we're going to switch it to room share uh and then we're going to switch the PM fee to room share which pad split is room sharing um so with this property let's say we're turning it into a seven
[08:50] bedroom or actually let's be conservative and say six bedroom and uh let's say the rins on a six bedroom are going to be about 4,800 a month that looks High let's let's finish our calculations here um your rehab budget there is going to be rehab involved on pretty much any air uh any
[09:10] PAAD split property just to build the rooms alone so actually um let's kind of be conservative and put in uh let's say with this one it's about 30,000 this is not only building some rooms but also um maybe we're just updating the bathrooms a little bit more or the flooring and then we're semi- Furnishing the property
[09:28] so the RV is actually probably not going to be the full amount it's going to be less it's going to be some something around 315 oops building extra rooms out of the living room doesn't increase your Equity or your arv um it just allows you to
[09:47] cash flow better using pad split so um you will have some negative equity initially on a turnkey property or mostly TurnKey uh you're paying for utilities you're doing long care on this property so let's say you're uh for six beds you're about and you're also paying for internet so let's say you're about
[10:05] 550 a month all of that in and then we're going to increase the uh maintenance and capex by 2% and uh you are still looking pretty good at 250 positive a month you went from -500 to $250 a month positive um and that's with um much higher uh percentage of the property management
[10:29] fee you're paying for utilities you have a higher maintenance in capex and uh you're still only 20% down so now um with this it is important to note that uh the rehab budget is considered out of pocket so this is not factored in um if we were to finance the rehab budget which there are plenty I that's what
[10:51] most people are going to do so we're actually going to delete this and put zero and we're just going to add um kind of a cheap way of doing this is 33 5 so we're adding the 305 the 30 to 305 and uh now we see your cash flowing less because you're financing the rehab so that's $72 positive a month now uh
[11:13] here's the here's the bonus though you're only at six bedrooms um and once again we Let's ignore this cash out refi this is going to be really for properties that you are buying distressed and you're putting a lot of money in to fix it and gaining a lot of equity so that's where that's
[11:30] where this section really comes in and can uh shine a little bit more so let's say you actually have seven bedrooms um and let's say you have a uh well we're going to leave it at two bathrooms they're both guest bathrooms we'll say this is now uh we'll go even more conservative and say instead of
[11:50] 5600 we'll say this is 5500 a month so you are now positive $536 a month with a pad split Prof property and this is factoring in you know it's going to vary deal by deal Case by case but we are really factoring in everything you can factor in the um property taxes are um you we can get
[12:12] exact estimates from the County Appraiser website but I found over time that a good average across all my service areas is about 1.68% of the purchase price and I actually have it of the arv though because when you refy if you are to refy it's going to pull from that
[12:31] number um and then the insurance is going to be off of um it's going to be about half a percent and it could be a little bit more right now uh but I leave it there you can change it based on your findings um so this actually could be closer to uh 6 of 1% and and we can change it there so you
[12:51] can see your your interest rates so um this is facturing everything everything um if there's something I've missed please tell me but uh that is that is it so I hope you enjoyed this I learned something and uh I appreciate you using my calculator thanks
[13:11] bye
