![]() ![]() When I was a new investor, this was one of the hardest things for me to learn. With this in mind, one of the most important things you need to learn to use this model successfully is how to accurately predict expenses. ![]() In fact, you should ignore it completely for anything that rents for less than $700, as you would want closer to a 1.5% or 2% number for a deal with lower rents to pencil out. It’s worth noting that the 1% rule is just a guide and doesn’t apply to all markets. ![]() However, when hunting for deals in nicer areas, I generally look for properties that meet the 1% rule, where monthly rents are 1% or greater than the purchase price of the property, and cash-on-cash returns are above 8.5%. With a lot of potential for appreciation in the next five or so years.įor these properties we’re aiming for above a 15% cash-on-cash return, and we’re looking for deals that we can refinance and pull out all of our capital once we finish renovations and leasing (the BRRRR Strategy). Louis market and our strategy is to mostly buy properties on “ the fringe” - areas that have good cash flow Some investors are looking for cash flow, while others are simply looking to break even on cash flow and make their money through appreciation in value and tax write-offs. When it comes to investing in real estate, a “good” return can be very different based on each individual investor and their goals. What Is a Good Return for a Rental Property? In this video I use the advanced calculator to model a real deal I found on Zillow, and talk through how I estimate expenses using just listing photos, and decide whether a deal is worth further diligence. Here is what the output of this tool looks like. The ability to add in additional income (laundry, RUBS, etc).Charts that show projected income, expenses, and cash flow projections for the next 30 years.If you’re interested in taking a deeper dive on a property, I built a more advanced calculator that also shows you: The calculator above is a great resource to quickly check if a rental property has the potential to be a good investment, but is still missing some important information you’d want if you’re seriously evaluating a property for purchase. ![]()
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