00:00Here's how to tell if this property you see online is a good investment.
00:02I'm giving you all the sauce for free, so make sure to...
00:05Jot down the purchase price, property taxes, and any HOA fees you might have.
00:10Property will need some work, so we're going to have to fix it up before we rent it out.
00:13This is known as the burr strap.
00:15So I'll open up a spreadsheet like this one, enter the purchase price.
00:18We're going to use a hard money loan, so we're going to...
00:20Our closing costs are about 10%.
00:22We're going to put about 10% down.
00:23We're going to pay about 12%.
00:2510% interest in three points.
00:27Now we need to figure out what our rehab budget's going to be.
00:29So we're going to...
00:30Quickly take a look at the pictures.
00:31We're going to have two new kitchens, two new bathrooms.
00:35New flooring, new light fixtures.
00:36I'm going to assume 70k in rehab.
00:40Once we fix up the property, we're going to take a new loan out to pay off the original loan.
00:44We're going to...
00:45We're going to use about 75%.
00:46That's known as a cash out refinance.
00:48We're then going to pay closing costs, have an interest...
00:50And to the property taxes here, enter the home insurance, enter 5% for...
00:55Repairs, Vacancy, and CapEx.
00:56We pay about 10% in a property manager.
00:59And then the tenant...
01:00We'll be paying the utilities.
01:01So now we need to figure out how much the property can sell for.
01:05And for that, we're going to go to PropStream.
01:08PropStream is a tool that has prop...
01:10properties all across the country to help you find off-market deals.
01:13For a link to that, comment the word...
01:15So we pull up the property, and then we go to Comps and Nearby Listings.
01:19What we're...
01:20What we're doing is searching for properties that are nearby, that have been sold recently.
01:24So this one...
01:25This one was semi-fixed up, sold for $130.
01:27So I think that once fixed up...
01:30Based on this comp, that the property can be at least worth $130.
01:34Then you...
01:35Using Rental Meter, I type in the address, and I type in the number of bedrooms and bathrooms.
01:39And I find out that...
01:40That the rent is about $1,700.
01:41So if I bought this property at asking price, I would be...
01:45making $344 a month, but it would cost me about $80,000 to purchase.
01:50So this would not be a good burr.
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