Calculating Numbers on a Rental Property [Using The Four Square Method!] - Summary

Summary

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Brandon from BiggerPockets.com explains how to analyze a rental property using the "Foursquare Method". He divides the analysis into four boxes: income, expenses, cash flow, and cash-on-cash return. He uses a hypothetical duplex as an example and shows how to calculate each box using realistic numbers. He also mentions some factors that can affect the overall return, such as equity, appreciation, and selling costs. He invites the viewers to download a spreadsheet and use online calculators to do their own analysis. He also promotes the BiggerPockets webinars, podcasts, forums, and tools for learning more about real estate investing.

Facts

Here are the key facts extracted from the text:

1. The speaker, Brandon, is an author and co-host of the BiggerPockets Podcast.
2. Brandon is explaining his "Foursquare Method" for analyzing a rental property.
3. The Foursquare Method involves four boxes: income, expenses, cash flow, and cash-on-cash return.
4. The property being analyzed is a duplex listed for $200,000.
5. The duplex has two units, each renting for $2,000 per month.
6. The total monthly income is $2,000 x 2 = $4,000.
7. The expenses listed include taxes, insurance, utilities, HOA fees, lawn care, snow removal, vacancy, repairs, capital expenditures, property management, and mortgage.
8. The total monthly expenses are calculated to be $1,610.
9. The cash flow is calculated by subtracting the total monthly expenses from the total monthly income, resulting in $390.
10. The cash-on-cash return is calculated by dividing the annual cash flow by the total investment.
11. The total investment is calculated by adding up the down payment, closing costs, rehab budget, and miscellaneous costs.
12. The total investment is $50,000.
13. The annual cash flow is $4,680.
14. The cash-on-cash return is 9.36%.
15. Brandon recommends using BiggerPockets.com/Analysis for more detailed analysis and calculation of cash-on-cash return and overall return.
16. Brandon hosts a live webinar every week on BiggerPockets.com, where they analyze a real-life property together.
17. The webinar is free to attend and signup is available on BiggerPockets.com/webinar.