How to Analyze a Rental Property (No Calculators or Spreadsheets Needed!)

[@CoachChadCarson]

I made a new video that explains how to do deals in 2023 if the 1% rule or other cash flow rules of thumb don't work: kzbin.info/www/bejne/aIKWo41vi8qLqpY

[@chandra0094]

I started watching about real-estate videos since 2021 but ... This one of the few channels which provides really deep insights and number calculations..... Good work bro 🔥

[@CoachChadCarson]

@@chandra0094 thanks for the feedback! I plan to do more deal analysis videos on real deals soon.

[@bbqworld2103]

Good video. How can manage taking over a property where there are tenants already in property, keep the rent the same or increase the rent by 10%, which might drive them away and I would be trying to get new tenants during that time? Thanks

[@kdkdkd4153]

Excellent video. Guess not teaching math in public schools is the reason people are broke.

[@Ricocase]

Cool video! Per equity evaluation, what about depreciation, divide by 39?

[@this_mfr]

Dozens and dozens of videos, with millions of views and click bait thumbnails and titles, and NONE of them cover this information. "How you can invest!" And then don't talk about how any of it is done. This is quality content and much appreciated.

[@CoachChadCarson]

Thank you Chris!

[@this_mfr]

@@CoachChadCarson And a reply from the content creator! While you're here.. 😄 I'm taking a cash out refi to begin investing in properties. Do you have any opinion on Roofstock or recommendations for purchasing investment properties in other states?

[@passiveincomeac]

Agreed

[@dannyduffy9506]

Finally someone is using plain English. It is amazing how much white noise you hear when starting out but this video gives real practical advise. I'm gathering knowledge now before taking the leap of faith and getting my first rental. Thank you so much for breaking this down into easy to follow steps that i will find invaluable moving forward. Great video and much appreciated.

[@CoachChadCarson]

Wow, thank you! So glad you are here.

[@henrymenendez7655]

Man I am not going to lie to you, this is probably the best rental property investment video I have ever seen

[@CoachChadCarson]

I really appreciate that Henry!! 🙏 Thank you for watching.

[@tanyanguyen2204]

Agreed! Every time I look at a property I have to review this video several time as one of the best video for new investor like me. Wondering if @CoachChadCarson has any video on offer price.

[@jew-el1]

If you got to say I’m not going to lie… you’re probably lying. Just say this is the best video you’ve seen for real estate investing.

[@antoinetbd8016]

Bro you are easily the most honest educational content creator out here on investment in real estate....thankyou for not being dramatic for likes and subs..I watch this several times to keep me grounded

[@CoachChadCarson]

@@antoinetbd8016 thank you for the feedback! I just like to teach and be helpful.

[@thebricklayer667]

I love your back of the envelope calculation. I have owned up to 70 properties, made large amounts of money, lost large amounts too, but real estate investing really is this easy. You really do a great job breaking things down for newer investors. Thank you!

[@CoachChadCarson]

Thank you for the feedback!

[@Elaba_]

Did you made a profit over all? What advice can you give?

[@ryebread447]

Even in 2024?

[@julianaw.511]

This is the best video I have found on the internet about the topic. Well done!

[@jeansoo-learngrowserve3266]

This video is GOLD. Every real estate investor should watch this. You went in depth on all the major components of real estate analysis and broke down the concepts so well. This is the type of video I'll always refer back to. Thank you!

[@CoachChadCarson]

Glad it was helpful, Jean! Thank you for watching and for the feedback.

[@angelaboyd1254]

Make a video about Transformers

[@billygraham5589]

@@CoachChadCarson Coach; I am 63, a college graduate, I am a working person but (obviously) I can retire. I have $20K in the bank for a downpayment on a piece of property, and would like to buy a home (to rent out a room) or a rental property (and I would live in one of the units). I am looking in Texas, the Corpus Christi area. There is a 2 on a lot deal, the owner is asking $70K. The places need some work, need carpet or flooring (and I'll probably choose flooring). I have a "high 700's" credit rating, but I only earn like $2K per month, and I will probably earn less for a while if I retire to do work on the properties. My retirement income will be MORE than what I need to pay a monthly mortgage payment on the properties, but I will be done working on the rental unit (the unit I rent) before a month. Everything works out nicely in my mind. (I will work part-time at the same time I am working fixing the rental unit for rent, so my income should be well over $1,500 per month, not to mention the $20K I have in the bank for investment.) How do I convince the FHA loan people or conventional loan people this is a good deal? The very negative loan broker tells me that the FHA will NOT let me have a loan, that I will have to go to conventional loan, or private money -- what do I need a loan broker for? Anyway, the rents in the neighborhood where I will buy is about $800 per month. That kind of rent will be enough to pay the loan and expenses and even pay a small positive cash flow. I will even rent a room out in the other unit on the property that I am living in myself. All your criteria seem to be met with this deal. How can I get the lenders to agree? I am looking at becoming a real estate investor. I was a licensed general contractor for a few years between 2017 and 2019, then I decided I would become a teacher -- when the state of California opened up its "district intern" program and I found out about it. I was on a "district intern" program in 2009, "hired" by the Los Angeles Unified School District in CAlifornia. Then it closed up, and I had no teaching job. In fact, I had no real job until 2014, doing a bunch of gig jobs, mostly handyman work, some paralegal work too. I got a job in a credit card factory in 2014 and worked at that for 3 1/2 years until in 2017 I decided the economy was good enough to try something else. But at a Christmas party in 2018 I found out that the "district intern" programs re-opened, so I went and signed-up with the Los Angeles County Office of Education as a "district intern." I finished the "teaching skills" part of their program, but did not yet take the "subject matter" skills exam, but by that time the PROGRAM CLOSED AGAIN! But this time for "covid 19" reasons. I left for Oregon to stay for a cheaper rent at my sister's ranch in Oregon. Too cold for me there. I am moving to Texas. That's my life story. Let me know how to get a loan at the best possible rate either by conventional loan, FHA, or maybe private money. I am working now, in Oregon, but moving to Corpus Christi like in a few days. By the time you read this (if you do) I will be in Corpus Christi. I will try to become a teacher in Texas too -- they have "district intern" programs there too. But I will keep working either as a teacher or as a handyman working on my own properties and part-time at a golf course and pull my SS retirement income at the same time. I am still quite spry. I look at my physical work as exercise. I am in shape and I do not shy away from work. So, again, you know my life story here, let me know what you would do, especially with regard to getting financing. I understand I can obtain as many as 10 rental properties using FHA financing? Great! I really want to set up for retirement and owning a lot of rental property. I think homes are best to rent, but maybe apartments are good too. Would like to eventually own a mobile home park.... let me know something. Thanks

[@leehay9323]

Op

[@johnwaters7847]

@@billygraham5589 I wish you great success in you endeavors. However, focus on one thing first. Ask yourself what do you want. Real Estate is the industry that have made tons of people millionaires, but the industry needs focus. Becuase Rental Properties business is different from investing for capital gains, also different from mobile homes, homes parks, or RVs. Also different from airbnb So decide what you want and focus on it. Because although all real estate have these same valuations formulas, the business side individually have some perks you must know so you can achieve your dreams. Again I wish you great success you are doing great.

[@pdurkim]

The fact that you put this lesson on paper makes your teaching so much easier to understand than others who just talk at you on video. Great job!

[@CoachChadCarson]

glad it was helpful, Peter! I think better on paper, too. Thanks for the feedback.

[@TheSONofOL]

This video is awesome and I used all of these tips to buy my first 4plex. Another thing to take into consideration is look at what the Market Rate Rents are in your area. I look for Rent "Wedge" Deals. My 4plex rents were at 575 for all 4 2brs. Market Rate Rents are 750 in my area. I knew with minimal work/$ I could raise those rents to Market Rate. I went one step further and went for more updated "luxury" apts. Raised rent to 850 and thus increasing the value of my building and my ROI. Building was 235k and is worth 340k+. Not to mention my basement is massive and has potential to add a 5th unit upon city approval. Look for these key things to build true wealth! Thanks for the great info :)

[@CoachChadCarson]

Nice! I like the "wedge" deal term. And finding those deals where you can add value certainly makes a lot more sense! It's also where I've made the most money. Thanks for sharing your details!

[@BrentS100]

Add A/C for excellent forced appreciation in Montana. Spend $15K=$30K in forced appreciation. You are the best teacher!!!🎉🎉

[@nancyguzman7887]

I went through entire exercise of writing everything out and working out the formulas with real properties with my notes, then once I understood it a little better (I had to rewind several times, haha) I printed the cheat sheet and added some abbreviated notes as reminders. Great, simple tool for what at first seems overwhelming. Thank you!

[@CoachChadCarson]

Students who take notes and apply what they learn are the best! Nice job Nancy! It definitely makes me happy but more importantly, I think you'll notice a difference in more confidently analyzing your own deals.

[@khushbupatel1465]

This video is so helpful and have watched multiple times and can’t recommend enough. Even people with no finance background can make sense so easily. Thanks, Coach.

[@CoachChadCarson]

Thanks for the kind feedback, Khushbu! I appreciate your stopping by to learn.

[@brianborkowski5977]

@@CoachChadCarson With the high prices of houses, I have searched and haven't found a house in our area that meets the 1% rule. Does this mean to wait until rents rise in the area or home prices fall or both to get closer to the 1% rule...or has things changed with the 1% rule

[@brianborkowski5977]

@@CoachChadCarson How do you know what the rent should be in a particular area since it fluctuates even in the same city (in Memphis, rents can range from 1200 dollars/month in the less desirable areas to 2200 dollars/month in the better locations. Do you use a real estate website and look at rents in the area to get an idea.

[@michaelallen1154]

@Brian Borkowski ... guy, if you can't see the writing on the wall at the moment in terms of the market, you aren't cut out for this kind of work.

[@CoachChadCarson]

​@@brianborkowski5977 hey Brian, I made a newer video about that question. Let me know what you think: kzbin.info/www/bejne/aIKWo41vi8qLqpY

[@tedebayer1]

Property prices have increased so much in the last two years in my area, its priced the rental market out of existence, there is no way you could look at a house at the 1% rule, even breaking it up into two or three rental spaces, the average person couldn't afford the rents.

[@marilynyingkempster9471]

I live in California. The 1% rule is impossible here.

[@nohamohamed9837]

True 100 💯 I’m in California and that’s impossible. As an investor should I wait or just accept 0.2% rent ?

[@GB-ue6wr]

We Californians are like where is he getting these house prices from.. you can’t get much for under 500k in California.. 500k/ 30k 2500 a month rent) = 16.6 That’s not too bad but with a mortgage and high interest rate cash flow would most likely be negative..

[@restorationcarpetcleaning4140]

You can purchase property anywhere in America. Tennessee is a great place for incredibly inexpensive homes. If you’re dealing with section 8 housing then the rental income is guaranteed.

[@ksmith2852]

​@@restorationcarpetcleaning4140 So are the major damage to the property as well as twice the people on the rental agreement and three times the number of dogs or cats plus guaranteed smoke & pot damage.

[@TheRam-b6w]

I have learned more from this single video than I have learned after watching real-estate videos across the last 8 months ( at least 50-60 videos and shorts). Thank you for this informative and super clear video. Much appreciated! -- First-Time Homebuyer

[@CoachChadCarson]

Great to hear! Thanks for watching and thanks for the feedback! Best of luck with your first purchase.

[@bennyacosta1560]

Stuff like this does not get taught in school.. At least not any school i've ever been to. Thank you.

[@mfundomkhize3016]

This is the most articulated and simplistically explained property Investment with calculations I have ever come across so far.

[@CoachChadCarson]

Thank you so much, Mfundo!

[@OptionsJunkie]

I learned something similar to this in an audio book series. They taught NOI similarly, take total annual rents then subtract property payments on a 15 year mortgage, then subtract 10% of total rents for management fees, 10% for maintenance reserve, and 5% vacancy rate. If the NOI was positive after all those deductions then it was a deal, with expectations of 3-5% rental increases per year.

[@albe7292]

what audio book please

[@OptionsJunkie]

@@albe7292 The Weekend Millionaire, I got very lucky my first property. I was looking for warehouse space for myself, at least 3k sq feet for my business. In the area I was looking, I found a property for sell that had 2 buildings 10k sq feet each. With this formula you can value a property to the penny, if asking price is under that then its a buy. In this particular case, in my area you could rent 10k sq feet for $2400 easily per month, so 2 buildings 4800 per month. 4800x12 is 57,600 in expected rental income. Subtract 10% management fees, 10% maintenance fees, and 5% vacancy, bringing net income down to 43,200. Then deduct taxes and insurance which is around $3000 a year combined. So $40,200 was net rental income. If my total payments per year are under 40,200, then I cash flow the difference. Anything over is an easy no. The owner was asking 200k on the property and tax value was around 180k. He owner financed for 15 years at 4% with 0% down. My payments are $1479 per month or $17748 total, so the property cash flows over 22k per year, assuming I never raise rents, and in 15 years I own it. The Weekend Millionaire was probably done in the early 2000s, but its rules are the same. Most properties that hit zillow, redfin etc have already been picked through, and are well represented. The best deals are from just reaching out to people personally. The course talks a lot about structuring deals and offers to best suit the sellers. The $30 course over a 15 year period just in my 1st property will add over million dollars to my total income/net worth.

[@HungNguyen-qo9xt]

@@OptionsJunkie Happy for you! There are some big home improvement expenses such as Roof, HVAC, and Plumbing... did you factor them in maintenance fees 10% as you mentioned?

[@OptionsJunkie]

@@HungNguyen-qo9xt The audio book goes into details about any renovations that need to be done before purchasing a new home like hvac,, new appliances, or roof etc. Those problems are all solved with the math prior to even purchasing the home, and all fresh before the 1st tenant. The 10% maintenance fees pretty much covers all future home repairs. A roof typically lasts 20 years and Hvac 15+, I buy 5 year warranties on all appliances to cover my bases. A rent of say $1800 a month brings in over 43k in 20 years in maintenance reserve. I got a new roof on my home in 2020 and it was $14000 and I have 3700 sq ft. So say the avg roof for an 1800 rental is $12k, new Hvac replaced in that 20 year spread another 12k. That leaves you with 19k to buy what appliances needed, and I believe is plenty, but if you felt you needed more you could reserve 12 or 15% in the math.

[@theinterviewhacker]

@@OptionsJunkie So Zillow is a waste of time when finding rental property?

[@KirbyFnL]

After 13 years of college, I truly understood today balance sheets in most simplest form. I wish you taught accounting in my college area haha thank you for amazing inside Coach Carson!

[@jroberts303]

That was a really good analysis. I’ve been around real estate for 15-20 years now, and you described these income elements better than I’ve heard before. I will definitely use this to teach my kids :-). Thank you

[@CoachChadCarson]

Thanks for sharing, Jimmy! Passing this knowledge down to others so they can use it successfully is what it's all about!

[@davidfredrickson5193]

Thinking about a business to make money weekly,, With over 60,000 account holders blockspace has been at the forefront of the forex trading industry since 2016,access over 10,000 global markets and trade with attractive marginal rates..it is regarded as one of the best, most beneficial, brilliantly successful companies in the industry of forex trading

[@erikanderson1402]

Have you considered doing something useful though?

[@omachinancy]

OMG, my dad did this all the time! He died at age 98 6 years ago. He'd get a napkin and pen. Done. I loved seeing this. Brought back great memories.

[@CoachChadCarson]

So cool to hear about your dad, Nancy! Thank you for sharing. That's how it was done by the old pro's.

[@omachinancy]

@@CoachChadCarson Yes, he was an old pro! His favorite thing was to sit down and pencil it out, as he would say. If the numbers worked, it was a go! He taught me so much about buying and selling. Emotions are not part of real estate. It's all about the numbers, and timing.

[@mjones2424]

Thank you for putting this simple yet in-depth presentation together. Simple math education in real estate at its finest. This was so helpful and it didn’t take some flashy so called “guru” giving vague examples. Wishing your channel much success!!

[@CoachChadCarson]

thank you Jake! I like it simple (for my own understanding!!).

[@germanp4784]

you are awesome buddy, this guy just gave us all this free info and isnt trying to sell us a course

[@nexgengabi]

I appreciate your emphasis on why equity matters. I also tell my clients all the time that appreciation does not pay your monthly expenses and to pay attention to income and expenses. Great video! Lots of gold nuggets.

[@CoachChadCarson]

Very true! Lots of real estate investors who are rich "on paper" but have trouble paying the bills (especially in a downturn). I appreciate the feedback and best of luck with your investing and helping clients.

[@gabrielarozborska2404]

@@CoachChadCarson Yes! I totally agree. Greetings from Chicagoland

[@benjaminlewis671]

I usually can play videos at 1.5x, although to full gather the facts, I had to keep rewinding. Thats means it was condensed and full of good info. Great job, I have heard of everything here, but never have I been able to put it all together. Thanks

[@ponzianomanning3071]

All of these formulas are also most commonly used in stock analysis, for example the 1st formula: GRM can be compared to a stocks P/E ratio (price/earnings). Its amazing the power of these financial tools and how they work with all asset classes. Thanks Coach!

[@CoachChadCarson]

True! There are some nuanced differences but pretty much the same concept. Thanks for watching!

[@davidfredrickson5193]

Thinking about a business to make money weekly,, With over 60,000 account holders blockspace has been at the forefront of the forex trading industry since 2016,access over 10,000 global markets and trade with attractive marginal rates..it is regarded as one of the best, most beneficial, brilliantly successful companies in the industry of forex trading

[@yaparker22]

I am not the type to spend too much time in seminars. This is 100% better and any time spent in a seminar that will yield no info and ask for some membership later. Thanks, I appreciate everything about this video.

[@CoachChadCarson]

Great to hear! Thanks for the feedback and for watching.

[@Just_trying_stuff]

Watching this video I feel like sitting with Coach Carson at the pubs bar counter and having a beer while he explains it all. Great content

[@CoachChadCarson]

Cheers my friend! 🍻

[@kmarcs100]

Coach, I really love your videos. They are very rich with content, unlike many other RE “Investors” that are more about buying their courses. After finding you on KZbin, I decided to follow you strictly. You solve it for me when you made mention, simply, four houses can give one financial freedom. I bought both of your books and they are my “go to” over the many RE books that I have. I look forward to your mentoring soon.

[@thanhle3480]

Hi Coach Carson, THANK YOU VERY MUCH for this comprehensive rental property analysis for both income and equity sides. Quick question: among the four income metrics - GRM 1% rule, cap rate, NIAF, and CONC, which one is the most important one? Let's say we compare between Property A and Property B and Property A has a better GRM but worse NIAF; then which property is better overall? Is there a weighted average that can be assigned to each of these income metric? Also on the equity side, can you educate more on how to find discounted deals? (i.e finding through a specific database, associations, networks, etc). I am looking forward to learning more from you!

[@rizk2772]

Excellent . No time waster, no nonsence talking talking talking.

[@CoachChadCarson]

Thank you!

[@deffsam]

I saved this one for sure Coach. It's a life long tool. Your KZbin is great!

[@CoachChadCarson]

Thanks Sam!

[@khalilsane]

Oh My god! In 2023, thank you thank you thank you! As an accounting major i learned 2 formulas that i’ll use forever

[@christopherandersen7327]

Love this! You broke down each rule very well and helped me to better understand the foundations of them. I know NIAF as cash flow so my mind was a bit blown when it clicked that you were talking about the same thing.

[@TheSuperduke08]

This is probably the best video I have seen on rental properties, ever!

[@CoachChadCarson]

very kind of you to say! thank you for watching. Glad it was so helpful.

[@nicolemelveney8120]

Brilliant - Thank you for really breaking it down and laying it out - Really appreciate it! Im not great with excel - this really helped with being able to properly format. My clients will be equally as grateful! Looking forward to the rest :)

[@CoachChadCarson]

You're very welcome! Thanks for watching, and I'm really glad to hear it was useful.

[@BionicVee-s7n]

So agreed

[@rilenyjobin3796]

kzbin.info/www/bejne/e6rIl3Svl8t6nbs this channel will help you this guys explains very well

[@ClarkCeballos]

Ton of Value... clear as the wind love it. Much blessing to all!

[@mlsphotobybrentwoodgraphic3124]

So far your video is my favorite. Simple, easy, clear! Thank you!!!!

[@CoachChadCarson]

Thank you!

[@watchthewindblowby]

Hey, this is the first video of yours that I've seen. Really like the drawn explanation. Some other channels just run through the subject like you're supposed to know what it all means. Really liked this approach for folks like me hoping to get started. Looking forward to browsing your other videos. Thanks!

[@CoachChadCarson]

Thanks for watching! And I'll keep that in mind and plan to draw out more explanations on the little whiteboard:) Hope you find the channel helpful.

[@keantaesworld9076]

That’s what I’m saying bro 💯

[@davidfredrickson5193]

Thinking about a business to make money weekly,, With over 60,000 account holders blockspace has been at the forefront of the forex trading industry since 2016,access over 10,000 global markets and trade with attractive marginal rates..it is regarded as one of the best, most beneficial, brilliantly successful companies in the industry of forex trading

[@AMIR-nm7fo]

After been a Realtor since 1985 this is the BEST explanation

[@CoachChadCarson]

Wow. That means a lot. Thank you for watching and for the feedback.

[@hannahf.9545]

Thank you so much for breaking down how to analyze a property and then how to compare it to other potential properties. I’m just starting to consider rental properties and this was the perfect video to begin thinking about the relevant factors.

[@CoachChadCarson]

Glad it was helpful, Hannah! thanks for watching and good luck with your next steps.

[@katherinelott958]

What a great video, thank you! Everything was explained in a clear and concise manner, with no fluff. Just what I was looking for. Again, thank you!

[@CoachChadCarson]

Thanks for watching! I'm glad it was helpful.

[@brandonkilbride277]

This is great information provided for free. I’ve been doing this stuff for a while and I haven’t found anyone on KZbin that explains it as well as you. Great job sir! 👏🏼

[@CoachChadCarson]

Thank you for that feedback, Brandon! 🙌

[@christianmoy3477]

Thanks!

[@CoachChadCarson]

Thank you!! 🙏🙌

[@seanmckay9194]

Great stuff Coach. When you taught us the NOI formula in 2011 it was a lifesaver. Thanks for stacking these tools so that we can understand how the cash flow analysis interacts with comps and how to prioritize. This is one of those dense content videos that I will need to come back to a number of times.

[@CoachChadCarson]

Understanding NOI really is a game changer. Yet, so few people do it correctly! Go figure:)

[@davidfredrickson5193]

Thinking about a business to make money weekly,, With over 60,000 account holders blockspace has been at the forefront of the forex trading industry since 2016,access over 10,000 global markets and trade with attractive marginal rates..it is regarded as one of the best, most beneficial, brilliantly successful companies in the industry of forex trading industry

[@jakejake7289]

Literally the best YT post I've seen on rental basics!

[@CoachChadCarson]

Thanks Jake!

[@jakejake7289]

@Coach Carson Ordered your book on Amazon 🙂

[@roberthines4882]

BEEN DOING THIS FOR 30 YEARS!!!!!!!!!!!HAVE 40 PROPERTIES I QUIT MY JOB AT 39 IN 2004!!!!!!!!!!!THE BANK WAS GLAD I QUIT BECAUSE THAT GAVE ME MORE TIME TO WORK ON MY RENTALS!!!!!!!!!OH YEH I GOT LAUGHED AT BECAUSE OF MY JUNKIE HOUSES!!!!!!!!!!!!!!!BEEN DOING WELL EVER SINCE!!!!!!!!!!!JESUS IS LORD!!!!!!!!!!!!!!!!

[@danielsnook5029]

Well done!!

[@JohnAcreman]

Amen

[@enmanuelgp4539]

Ok 😳

[@spacePickle00]

Any tips for a beginner?

[@Living_BrowardFlorida]

🙏🏾

[@keantaesworld9076]

Bro I’ve watched so many different people on KZbin on real estate and so far you’ve explained this way better than every other KZbinr I’ve watched . All the other KZbinrs will make 5 min videos and honestly just brag. But you my friend take your time and break it down. I learned a lot from this video thank you. I subscribed

[@CoachChadCarson]

Thank you for the feedback. I really appreciate you watching and learning with me. Hope we can do more!

[@rhuckabe]

THE most helpful,informative explanation of these key concepts I've seen to date.

[@pauls6279]

Agreed

[@CoachChadCarson]

I really appreciate that feedback, Rife!

[@anthonyshackelford8514]

This is one of the best videos I’ve seen so far I’m a new investor and have scrolled over countless videos Chad thank you for breaking it down. This is the exact information that I was looking for to be able to start analyzing. I really appreciate it. It’s gonna stick with me for lifetime.

[@CoachChadCarson]

Awesome! Thank you for the feedback and for watching. It will take some practice but you can do this!

[@greatdadlife8018]

Thanks for continuing to help me add to my finance toolbox, Coach!

[@CoachChadCarson]

Happy to do it! Thanks for watching.

[@TheApprentice00000]

Hi Coach, thanks for the great video. I have a couple of questions please: Cap rate: - why don't we include the financing costs? Wouldn't that help have a better estimate of the returns compared to per example the bond 3% you mentioned as an example? I know you said it's easier to compare properties to know how good they are at producing income. But since we're also using the financing costs in the NIAF and cash on cash, why not use it here too? - How can I estimate the repair costs in the total purchase price? NIAF: - same logic with the cap rate question, could we calculate NOI - (financing costs + repair costs)? How do you estimate the appreciation of a property? How do you calculate opportunity cost financing for let's 15 years vs 25 years? thanks chief :)

[@georgenguyen525]

Great teaching. I have been in real estate rentals for years; nevertheless, your analytical method is so true and easy to understand to apply. Thanks.

[@CoachChadCarson]

I appreciate that feedback, George!

[@jrossi9250]

You summed up almost everything I have learned and used in 40 years of real estate investing. Great job. No exaggerated examples to make it look too easy. Thanks. I'm forwarding this to several close friends.

[@CoachChadCarson]

Wow. Thank you for that feedback. And I appreciate you forwarding it to your friends.

[@user-um3ne1lt1r]

I have a question about real estate, your reply is welcome. Should u invest in real estate before you own a house?. Thank you

[@CoachChadCarson]

It depends on your market. If you live in a high priced market it could make more sense to rent a home and buy investments out of town.

[@TravelwithBreezy]

Literally the best keys to keep in mind when considering investment properties! I’m so glad this popped up in my search. Thanks coach! Keep these videos coming!

[@grabthemappodcast]

I learned about using different formulas like gross rent multiplier and cap rate to analyze rental properties. Understanding the importance of income generation and equity building in achieving financial goals was insightful. A thorough and practical guide for anyone looking to invest in rental properties!

[@CoachChadCarson]

Thank you!

[@marshallcierovola376]

I'm just on the 1% rule so far. At the moment, in the market I live, no homes come close to the 1% rule. I know you mentioned you could adjust it as needed. You gave the example of 0.8% rule instead. I'm curious if others are finding it basically impossible to find a home that meets this criteria.

[@lisacalhoun8080]

i was thinking the same thing!

[@karld1791]

1% rule is rare to find. A way to meet the 1% rule I sort of see is to find a remodel that’s empty of renters, fix it up, then get new renters at the current market rate. This would have high up front costs and take time to generate income.

[@jennifercheney675]

When calculating the net income after financing, should you include not only your p&i payments, but your closing costs? Where are they reflected? Thank you so much for your podcasts and videos! They've been very helpful to us!

[@CoachChadCarson]

Good question. Closing costs are included in your cash on cash return. So, it is added to your down payment. And thank you for watching!

[@stevehaas9515]

Great 👍 way to do it.

[@vinniebarbarino-1]

Brilliant, i learnt more in 35min , than i have all year at school, cheers i just subscribed : )

[@CoachChadCarson]

That's what I like to here! Condensed learning:) Thank you for subscribing!

[@kiranknalla9040]

Really good content. Explained pretty nice in layman terms so any one can understand.

[@CoachChadCarson]

Glad it was helpful! Thank you for watching, Kumar.

[@ellenoir5678]

4yrs ago starting my real estate journey your video taught me alot thanks CC

[@CoachChadCarson]

Fantastic! I appreciate the feedback, and congrats on making it to 4 years of real estate investing.

[@ellenoir5678]

Yeah I'm youtube university all the way lol 😂

[@ririshow]

Wonder about the 1% rule, at least where i live! We are usually happy with a net return of 6-7%. In your example you get 12,6% which is great but sadly not realistic as far as we are concerned.

[@CoachChadCarson]

thanks for the comment. The 1% rule doesn't work everywhere or with every type of property. In my experience, the 1% rule translates to a 6-7% NET return (without leverage). This is after deducting all your operating expenses, because the 1% rule is just a ratio of the gross rent.

[@OMAR_QURESHI1]

This guy is literally providing gold!!!!! Thank you bro

[@CoachChadCarson]

Appreciate that feedback, Omar!! Thanks for watching.

[@VrushaliAwate-yz6rb]

One of the best videos on real estate 101. You are literally teaching like a teacher and that really helps . I'm completely new to real estate investment and this video has motivated me in the first 7 mins itself. Thank you so much

[@tanyarennie72]

We are starting out investing in the South African retal space. Thank you for giving me the tools to analyse properties better! You need to come visit!

[@brentsutherland]

A well thought out and easy to understand overview. Thanks for taking the time to put this together Chad! I'll be sending this along to my own clients.

[@CoachChadCarson]

Thank you Brent!

[@Walina1001]

Your clients will think you are stupid. Please check out my comments for why this information is flawed.

[@davidfredrickson5193]

Thinking about a business to make money weekly,, With over 60,000 account holders blockspace has been at the forefront of the forex trading industry since 2016,access over 10,000 global markets and trade with attractive marginal rates..it is regarded as one of the best, most beneficial, brilliantly successful companies in the industry of forex trading

[@envypropertymanagement9706]

kzbin.info/www/bejne/jXe9fHifpLZqppo

[@matthewduehring]

I use GRM as well. However I include in my calculation a plan for one months rent for maintenance and insurance, one month for property taxes, 1-month for vacancy. So I base it on 9 months instead of 12.

[@CoachChadCarson]

thanks for sharing you're approach! There are lots of ways to adapt the core formula.

[@zerlindaadimannuela1773]

thank you so much! You make it really simple and fun to learn. I'm 19 and im so excited to purchase my first property! Would love if you share tips on investing in rental properties for beginners. Love ur vids!

[@CoachChadCarson]

Thanks for watching Zerlinda! I actually have a playlist of videos for new investors. Here it is: kzbin.info/aero/PL5F-I4oW-y2GSa4B55DgpGOXFwhqMcCAm

[@MillennialMike]

I'm jealous you are getting started so young, I wish that had been me. The best thing you could do to start IN MY OPINION is to house hack. i have a few videos explaining it on my channel. But essentially just buy a duplex instead of your first single family home like your friends will be doing. Then move in one side and rent the other. The tenant will pay you rent and use that for your mortgage. You should be able to get most of your mortgage paid for that way. Then get a roomate. a significant other or best friend and charge them fair price as a roomate and BOOM you've probably paid for your entire mortgage. NOW you are living for free. NEXT BIGGEST MISTAKE is dont burn that newly freed income. SAVE it and invest in property number 2. This is the one that starts making you MONEY. Then buy number 3. 4 years after buying your first property you could easily have 3 more. And probably you are retired and financially free by 26 or 27. Good Luck you can DO IT

[@isaiasrivera8737]

@@MillennialMike mo poomk kmmmmmmmmmmmk

[@davidfredrickson5193]

Thinking about a business to make money weekly,, With over 60,000 account holders blockspace has been at the forefront of the forex trading industry since 2016,access over 10,000 global markets and trade with attractive marginal rates..it is regarded as one of the best, most beneficial, brilliantly successful companies in the industry of forex trading

[@ljreynolds7877]

Buy a duplex or 4 plex n owner occupy.

[@veronicarosario5980]

What a helpful video, im an accountant looking to do my fist investment and didn’t want another pep talk video about investing, I wanted numbers and formulas and you did just that, thank you soo much!!

[@jeremiahglenn5846]

Hey, thanks so much for the video. I’ve sat through lots of videos to better understand how to “run the numbers” and not many are as easily explained as yours. I’ll certainly refer back to this over time and have subscribed to your channel. Keep up the great work!

[@CoachChadCarson]

I appreciate that feedback, Jeremiah! Glad you stopped by and I look forward to connecting on other videos.

[@ericmarquez6747]

This was a nice breakdown. What do you do when you first looking at a property to guestimate what the potential rehab costs are? Is it just experience or is there a good rule of thumb to follow?

[@tsmith77772]

This is great stuff! Once thing that can easily confuse people though, is using your own terminology that is not standard terminology used in the market. An example is using NIAF (Net Income After Financing) which looks to be exactly the same thing as Net Income. I've been in the industry for quite a few years and never heard Net Income referred to as NIAF. That confused me when watching this video. Love your vids though

[@dennisgarcia7590]

How can this be confusing??? NIAF= (Net Income After Financing), is common sense for what it is.

[@tsmith77772]

@@dennisgarcia7590 It's also common sense to stick with standard terms instead of inventing your own new redundant terminology that means exactly the same thing :) It would be like inventing my own accounting term "accounts receivable after billing" which means the same thing as "accounts receivable". What's the point?

[@adamdecaul2457]

Basically 1% rule is any property with GRM below 8.33. Good to show how they correlate. So gives you and idea of a good GRM if prefer that method. Great video

[@elan3studio765]

I really enjoyed the video and format, Thank you !

[@CoachChadCarson]

Glad you liked the format. Thank you!

[@vincentanguoni8938]

Very good. Excellent info. I'm just getting out of the business at 70. There were times when I could spit into the wind and make money. Other times... Not so great. I once had a 14.5 percent mortgage. One of my best investments when rates dropped and I sold. 18 months. Price doubled. I was happy. Long term capital gain 10 percent ... Thank you irs...

[@CoachChadCarson]

Thank you for sharing your story and insights, Vincent. It's great to hear from someone with your experience and that real estate has worked well for you.

[@jenrichardson2895]

Thank for the quick calculation methods. I would love to see more market specific examples. In Seattle, there are a lot of 1 bedroom units going for $2000/month but the SFR property likely costs close to $800k. Would we need to factor in multi unit SF homes? I can't see where a $200k home could get $2000/month. Would love some examples. Thank you!

[@CoachChadCarson]

Noted. Good suggestion on examples from different markets. I'll plan to do some deep dives on running the numbers in different places in future videos. Higher priced markets have a different dynamic of rent to price ratios. So, the 1% rule is less applicable - which also means they do not produce as much cash flow for the price you pay. You have to either make money in other ways - like appreciation (forced or passive) - or you have to find other niches where cash flow is better, like short-term rentals, commercial, mobile home parks, etc. Some people also just invest out of town in other markets that do have the cash flow dynamics they want.

[@TruthAboutRealEstateInvesting]

The beauty of these formulas is you could literally sit down with Zillow and start running numbers on properties right away. You could analyze properties while watching Netflix or waiting in line.

[@WILLIAMALLENAYL-SUCCESS]

While I knew most, if not all of these steps! I truly appreciate you making this process available!

[@CoachChadCarson]

Happy to share! thanks for watching.

[@magicman9321]

I trust you because of my Clemson tigers helmet hanging in all its glory.

[@CoachChadCarson]

Go Tigers! 🐅💪

[@kharvey3946]

Love this video I’ve been looking for a simple explanation to start calculating deals. Thank you love the content! Keep it coming!!!

[@CoachChadCarson]

Great! Glad it was helpful. Thanks for watching.

[@JaniceNolan]

This was great! Simple-straight forward. I have been in real estate forever-love this.

[@CoachChadCarson]

Thank you Janice! That feedback means a lot.

[@CarnacTheMagnificent]

Yet more awesome RE content from the Clemson Tiger! Thanks Coach, will share! :)

[@CoachChadCarson]

Appreciate it Gregory!

[@davidfredrickson5193]

Thinking about a business to make money weekly,, With over 60,000 account holders blockspace has been at the forefront of the forex trading industry since 2016,access over 10,000 global markets and trade with attractive marginal rates..it is regarded as one of the best, most beneficial, brilliantly successful companies in the industry of forex trading

[@kingtazz5965]

This is a great video and the first (but not the last) video of yours that I have watched. This video is explained and broken down to the simplest comprehension. Great job.

[@Alexander-ls3cm]

I read the book "ABC of real estate investing" this the same information that was said in the book. It gaved me that extra boost of understanding the concept of each term and on how to analyze a property. Thank you so much for the helpfull video, for sure already subscribe, will keep watching your videos!!

[@CoachChadCarson]

That's a great book! He's an excellent teacher. Thanks for stopping by.

[@amandeepsinghid]

Man! This is one of the best videos so far. I so wish they teach us such things in school instead of shitty unusable not-required information.

[@CoachChadCarson]

I'm with you! I would've loved doing real estate analysis in math class. It would have sure made it a lot more fun and relevant.

[@Thyago2420]

I have made over $700 k from a $ 100k capital so far since I decided to make and see changes with my money, I have had a succession of payouts from trading Forex, I recently diversified some into dividend paying Stocks and for long term hold

[@riviera9383]

Nice, how can someone achieve this, Aren’t there risks involved, can you kindly elaborate

[@Thyago2420]

I employ the expertise of a pro for that, Benjamin ravies because it isn't as easy as it seems

[@riviera9383]

How can I connect directly with him please

[@Thyago2420]

Benjamin ravies That is his gmal alright

[@Lilyoregon]

This way you can still afford any property you want

[@AberrantArt]

QUICK QUESION: When you show the 50% rule (deducting half the rent for Operating Expenses) does that include Property Management in there?

[@CoachChadCarson]

Yes it does!

[@lisamargolis246]

Thank you Coach Carson for your time and effort to make this video , your explanation is easy to understand and very thorough. You help a ton of people, it's a very valuable information you are sharing, you have a good heart!!! May you and your family receive many God blessing!!!

[@CoachChadCarson]

Thank you so much, Lisa! I'm really happy to hear that it's been helpful.

[@janelesperance637]

I think so

[@TruthAboutRealEstateInvesting]

These are some great formulas when analyzing properties on your own. When we find properties for our clients in the Toronto area, we just run the numbers through our Property Analyzer spreadsheet for them. That way we can send them only properties that meet their cash flow and ROI expectations. Often we have to show clients what to expect from different markets so they are disappointed when we start looking for properties. But it also allows us to make a quick move on really good deals when they come up.

[@thelawnranger184]

Thanks for the great info! I knew, as soon as I saw that Clemson football helmet, I was gonna have to listen at 1.5! Go Tigers.

[@CoachChadCarson]

Ha, Ha. Yep - slow talking down south:) If I have to listen to myself when I edit videos I use it on 1.5x speed as well, so I understand!

[@yiminghu4684]

Concise but comprehensive. The most essential framework for rental property investment. Thanks!

[@CoachChadCarson]

Glad it was helpful! Thanks for watching.

[@goldassayer93555]

Kind of a long and drawn out statement of what my Grandfather taught my Father in the 1940's. 100 times the monthly rent equals a fair price for a property because this gives you a 12% return on your gross investment and you can make a profit on that after usual maintenance. KISS

[@CoachChadCarson]

Your grandfather was a smart investor. Kept it simple!

[@davidfredrickson5193]

Thinking about a business to make money weekly,, With over 60,000 account holders blockspace has been at the forefront of the forex trading industry since 2016,access over 10,000 global markets and trade with attractive marginal rates..it is regarded as one of the best, most beneficial, brilliantly successful companies in the industry of forex trading

[@thegzak]

How do you get a sense of operating expenses before buying? Similarly how do you estimate the cost of repairs based on property inspection results?

[@CoachChadCarson]

There are rules of thumb, like for me 40% is about average for operating expenses. But you really have to run it on every property because they are all different. For repairs, its hard to predict exactly. But the older a property is and the more repairs it needs, the more I will allocate to repairs.

[@CoachChadCarson]

*Internal Rate of Return* is the best metric I've found to see how a rental performs. See me break it down in this next video!! ► kzbin.info/www/bejne/fnvRn6OOpLdpr5I

[@jjr4070]

Good video but what I don't understand is how can one find the CAP RATE on a property BEFORE they own that property and by owning it would know what their operating expenses will be? How can one know their operating expenses before having the property and thus how can you do the math to get the CAP RATE?

[@jjr4070]

And the other question I had is: do we need to use ALL or just some of these calculations in order to size up a property to determine if it's a good deal or not?

[@CoachChadCarson]

@@jjr4070 good question. Short answer - you just have to estimate. But you can get good at making fairly accurate estimates. For example, property tax rates are on your local tax assessor website. For insurance you can get quotes from an agent (or talk to investor friends to see what they pay). Management fees you can get quotes on (often 8-10% for my residential properties). Maintenance is tougher to pin down because some properties have a lot more than others (older, high maintenance materials, etc) but just to give a rule of thumb my properties have averaged between 10-20% for maintenance and capital expenses over time. All of this together allows you to run the numbers on net operating income and cap rate before buying.

[@CoachChadCarson]

@@jjr4070 most people don't use all. It's like tools in a toolbox - some people prefer one tool over another. And there are certain tools more useful in some situations than another. For example, I just use GRM for big picture market analysis. But NOI, NIAF, and cap rate (actually it's close cousin unleveraged yield) I use on every rental. I like to use a few core metrics because each one might tell me something a little different about the deal - like different gauges on an airplane dashboard. Hope that helps!

[@bigtaco4362]

is this all the math involved in income approac for appraisers ?

[@walex996]

Awesome video. Thanks a lot. Questions: 1. In terms of rentals (not the buy & sell house), what's the recommended number of years one should invest in a property, before breaking even and expecting profits? 2. The one-percent rule: If I'm able to make eg 1% of total purchase price from rent monthly. That means It'd take 100 months to breakeven (make 100% of total purchase price (literally make my money back)). Can that still be considered a viable business? Waiting 8 years 4 months to make back my money, before I can now start thinking of profits?

[@CoachChadCarson]

Thanks for watching, Olawale! And great questions. 1. It depends on the quality of the property/location you buy a rental in. I try to make a 6-10% cash-on-cash return for most of my rentals from the very beginning. But in reality, especially when I first started, I underestimated some costs and often had negative cash flow for 1 to 5 years. But if you plan well it doesn't have to be that way. 2. For the 1% rule it's actually worse than you said. It's GROSS/TOTAL rent and not net rent. So, let's say you net 60% of $1,000 rent after expenses, so $600/mo and you paid a price of $100,000 for the property. It would take you 167 months (almost 14 years) to get your money back. That same situation is equal to a 7.2% cap rate ($600 x 12 = $7,200 / $100,000 = 7.2%). That would actually be fairly standard for rental properties. So, yes - in real estate around our area that's a viable investment. You also have to remember you could always sell the entire investment and get most of your money back. So, that's usually considered in the calculations when determining your total "profit" of getting your money back. Most people also use leverage, so they would calculate how long it took them to get their down payment back - not the total price.

[@walex996]

@@CoachChadCarson thank you very much for your response sir. It’s very clear & well appreciated.

[@jay2aussie]

1% rule doesn’t work anywhere in Australia, it’s more like the weekly rent = 0.1%. So a $400k property can get $400/week, sometimes, but often not. I have never seen a $400k property that can get $4000/month.

[@CoachChadCarson]

That's what I heard. How much would yiu guess an average property in your location has appreciated over last 10 years?

[@personxyz1840]

yes, same in US too, you never get a rent, all real estate is depends on appreciation.

[@noelkratzmann4453]

I agree for Australia that 1 percent does not work.

[@saadrbsongs]

Hands down one of the best videos to watch. It is worth the time! Thanks @coach Carson.

[@CoachChadCarson]

Great to hear! Thank you for the feedback.

[@victormutta1115]

Thank you so much for this video! Completely new to REI. I stumbled upon a property that seemed like a good deal but needed a video to help me confirm it with numbers. This video is exactly what I needed.

[@Walina1001]

A cap rate is not a return. They come from an income approach to value called direct capitalization. An investor never needs to calculate a cap rate. That is done by third party professional companies such as PWC that analyze closed sales and derive cap rate comps. All thos do is tell the market what $1 NOI is currently selling for. You cannot calculate a cap rate unless you have the NOI or the rate. Only a very poor investor would try to use asking prices to calculate anything. Also a cap rate has nothing to do with financing. It remains the same with no financing or 1oo% financing. So if you buy my $10,000 NOI for $100,000 you think you are making a "10%" return? NOPE! I used direct capitalization correctly and used cap rate comps of 12% X the $10,000 NOI and bought for $83,333 and made $16,667 by flipping it to you because you don't know how to use cap rates. Where's your 10% return now? Chad, back to the showers.

[@CoachChadCarson]

"an investor never needs to calculate a cap rate." You do know the same concept of a cap rate can be used by a 3rd party appraiser AND this poor investor who wants to evaluate a particular property? And this same poor investor can buy that property BELOW that market value because he or she understands how to use them more broadly than an academic exercise? Or maybe I should just return all the properties and profits I have earned over the the last 17 years with my incorrect use of formulas.

[@Walina1001]

@@CoachChadCarson First, you are not calculating cap rates. You are doing some novice calculation that I call a crap rate. Direct capitalization is V=I/r You do not have a V or an r and cannot correctly use direct capitalization with only one input of a three input equation. You are wasting your time. Secondly, a 3rd party will not have access to the principals of multiple closed sales to derive meaningful cap rate comps unless they are working for firms such as PWC or an Assessors office. Appraisers rely on these firms for cap rate comps that can then be used to VALUE the NOI's of their subject properties. They are not deriving their own cap rates. Thirdly, when you buy "below market" you have created a new higher cap rate and if the property is of any significance then the professional third party company such as PWC would analyze the sale and determine if it means that the market is actually softening or if there were circumstances to the sale that explained the increase in cap rate. And finally, any success you have had has been in spite of your obvious ignorance of direct capitalization.

[@ericmartin7145]

@Walina1001 I bet you're a lot of fun at parties...

[@克莉絲-c3u]

This is a super informative video. Thank you for putting the time an share w us!