How To Invest In Real Estate: The ULTIMATE Guide to Calculating Cashflow (EASY)
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- Опубліковано 3 тра 2024
- Here is EXACTLY how to calculate and analyze the cashflow of a rental property anytime you invest in real estate…and make as much passive income as possible! Enjoy! Add me on Instagram: GPStephan
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Brandon Turner from Bigger Pockets video: Calculating Numbers on a Rental Property [Using The Four Square Method!]
• Calculating Numbers on...
This is probably THE MOST important step anytime you’re looking for an investment…this one single calculation tells you EVERYTHING you need to know about the property….it’s going to tell you how much money you’re going to make, it’ll tell you how much a property is worth, and it’ll tell you how much you should offer on the property to get your ideal ROI.
Anytime you’re evaluating a property, you’re going to have to calculate the GROSS INCOME. This is the TOTAL amount of income the property will be generating, BEFORE expenses.
In addition to rents, it’s important to calculate any other income that property generates.
For example, I’ve seen some properties that have laundry unit income
I’ve seen some that charge separately for storage.
Some that charge separately for parking.
Now we need to go to the next step: EXPENSES.
Anytime you own a property, you’re going to have FIXED EXPENSES NO MATTER WHAT - this means that even if you bought the property outright IN CASH, NO MORTGAGE, you’re still going to have these expenses…they’re fixed, and there’s no way around it.
These expenses include:
Property taxes - that’s unavoidable
Insurance - you better have insurance
If there’s an HOA - I don’t like HOA’s
If you pay utilities for the tenants - make sure they save water
Normal upkeep - like a gardener, pest control, etc.
Repairs that need to be done
If there’s any management fee
And vacancy when inevitably a tenant will move out and you’ll be missing out on that rental income
After that - we’ll need to calculate our NET RENTAL INCOME. Subtract EXPENSES by GROSS INCOME and this is your net income. From this, your can calculate your CAP RATE:
Divide the NET rental income by the purchase price, then multiply that by 100, and what you have left over is your percentage return.
Next, we need to calculate the Mortgage Payment. Use www.MortgageCalculator.org to calculate your mortgage payment.
From there, subtract your mortgage payment from the NET RENTAL INCOME and that is your return!
But then we also have the RETURN ON EQUITY. Remember, every month you pay down your mortgage, part of that payment is interest on your loan balance, the other part is EQUITY towards paying down the loan…because remember, after 30 years, you’ll have no more mortgage and you’re owning this out right. So every month that goes by gets you closer to that goal.
In order to calculate how much equity you’re paying down, lets go back to MortgageCalculator.org, look under “calculate” where it says “show amortization schedule.” Then click “show annual amortization.” Then hit calculate.
So now, we add this back into our income, and that becomes your TOTAL ROI.
And that’s exactly how I calculate the cashflow of a property. With this entire formula, you can pretty much just plug in your own numbers and spit out the expected return!n!
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com
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Who needs a course when you have Graham consistently releasing these bangers for us
Bro...I see your comments EVERYWHERE. Seriously, the most random videos show up on my recommended...I check them out...and BOOM, there you are.
Graham Stephan I’m going to beat Justin Y. 😎 and we also like the same type of videos brah
@@ZacharyLaid goals
lovers?
@@bubblebuster4702 LMFAO
Real estate investment losing money is music to my ears. They are a major reason why the real estate market is the way that it is now.
Graham is pumping these videos so that you can't make any excuses to start investing in real estate
Went to a real estate seminar today and you taught me more than they did in 90 minuets 😂😂
Alejandro Santos was the seminar free at least? Lol
alex bob yes lol it was free
Alejandro Santos ohh okay lol at least it was free lol
i bought a condo for a really good price and while the HOA is absurd, using this chart I got an absolute money making steal. thank you for this info!!!
I got more out of this 13 minute video than the last 30 real estate videos I’ve seen. Well done again, Graham!
Like button: SMASHED.
Check out BP, they do have a pay half that gives you access to these calculators that are free but also to some legal docs + access to local real estate meetups. Obviously I also watch Graham but BP has been an equal player in my real estate adventure. Best of luck out there!
Same! Thanks for all the knowledge bro. Love the vids.
Most people remain poor because friends and relatives advised them against investing in bitcoin and trading forex while the wise ones kept investing and growing higher financially
It’s not about watching videos and wasting your time on strategies, I was ignorant doing so..so I decided to try Mrs Caroline’s trading service and ever since then I have recovered all I lost while trading on my own. Her strategies are superb
I agree with you. Finding a professional trader is the only way that could make you earn more profits than before
Man, I’ve watched a crap ton of real estate investing videos from a bunch of different sources, but damn, yours are always the most well edited and easiest to follow. Not to mention your personality/ energy is unparalleled.
damn i love real estate lol. These kind of example videos excite me so much. Just need to get my credit up and income history (only 19 rn) so I can qualify for a loan and get started.
Same here I’m 20
I am 17 so what?
I’m 15
Update????
How's it going?
Pro tip: Income is never gross 😉
Another banger! Thanks for consistently dropping these informative videos
Just wanted to let you know that I went from about 20-25 youtube channels I'm subbed to, to 5 and you obviously made it. And honestly, of the 5 left, your channel is watched over 95% of the time.
Keep up the great work at providing quality content!
Dude... This is probably the most helpful video I’ve ever seen. I’m a visual/hands on learner so seeing it laid out like that helps more than words! Thank you so much!!
Every home buyer should be required to watch this video prior to purchasing. Great stuff! If more people understood the math behind property purchases (even if they aren't investors), everyone would be way better off!
Thanks Graham!!! I been needing to see something like this 💪🏼💪🏼💪🏼
You got it man!
By far the best break down for how to calculate cash flow. Outstanding job. Loved your chart by the way.
I appreciate the video, and the fancy Photoshop ;)
Also, I’m currently binge watching your videos while on vacation. I’m learning SO much and can’t wait to start using what I learn.
Thank you! My wife and I are planning on buying our first rental property this year, a single family home, and your videos are not only helpful but inspirational. Keep up the great work!
Thanks!!
did you end up buying that rental property?
This is so much value I love it!
I'm so glad!
I've watched a few of your videos but you got a subscription just because of the loving shout out to the "competition" over at bigger pockets. That's good business and, honestly, just good human-ing.
Great video Graham...I learn this stuff super easy then any other videos. I saw 30 video approx but the way you explain is awesome.
I am looking to buy my first investment property and now I get idea how to evaluate the investments. Thank you again and keep posting knowledge videos.
Every time I hear the word Avocado, I think of you. This is not good.
ITS SOCIAL BRANDING
Freshnuts watches this??????
When I think about Big Penis real estate, I think of Graham
FreshNuts? What is this? A crossover episode?
I was just thinking that too lol 😂
Thanks Graham for taking my suggestion. This was cool. I foolishly never considered how I could make higher ROI if I had payments with less down. I just hate debt. I loved when you were showing the calculator and you said click here and don’t forget to click that like button. So F’in funny!
hahaha thanks man!
I never seem to be disappointed by your vids. Thanks for another great one and thanks for doing what you do!
Watched to the end. Appreciate this video alot! I've been trying to figure it out and just found this video.
Always coming in with the fire 🔥
THANKS MAN!
Great video Graham. I would add 1 more thing. Real estate is my side job so because of all the deductions, depreciation etc I save another $2-3k in taxes on my full time job increasing my ROI to 15-16% (not including property appreciation over time).
Great point!
That's awesome! I'm a Danny too and getting into real estate and I love my current W2 so I don't want to ditch it unless real estate takes off. I'll definitely use that tip!
GRAHAM! You've inspired me with all your content about real estate, youtube, passive income and of course, avocado toast! After I watched your videos, and binged your older ones, I immediately created a youtube channel. You the man :)
I keep going back to this one. Excellent work
Great value video!
THANKS!
Literally college in 13 min
UA-cam FTW
I have been trying to understand the difference between cash on cash and ROI for a long time and this example cleared that very well for me. Thanks Graham!
One of the most valuable videos you have ever uploaded. Thank you!
Graham, love your videos. Thanks for all the hard work. I know you have more experience than me but $100 in repairs with no capex is extremely low. Maybe 100$ per unit. Also not sure how you can get only a 1% closing cost. Maybe since you're a real estate agent but normally it's at least 3%. Just wanted to chime in. Thanks again for all the videos. Keep it up!
Graham I spent 37 minutes this morning watching the video you made about your worst tenant ever. Haha that is such an entertaining video. Really I just wanted to point out that I gave you 37 min of watchtime
Thanks so much man, yeah that was a crazy one...so thankful that's over with, lesson learned
I once fell asleep watching a playlist of his videos and woke up 7 hours later still playing in the back. Beat that 🤣🤣
@@GrahamStephan I cant imagine how you felt, glad you made it out with no casualties.
@@faustogallardo4807 haha bet, starting tonight I will have his playlists playing constantly for days on multiple devices. That should do
@@robert_iacob Im gonna do that to your vids so when you hit 1k you monetize asap like a boss
Great video and full of valuable information.
Thanks Graham!
Brother. I appreciate you taking the time. This is extremely useful. Thank you.
I made an excel sheet for this, makes things a lot easier!
Hey, if you can share this excel sheet it would be greatly appreciated (my email is martinperformia@gmail.com)
Nice video!
Thanks!
Thank you ..thank you ...thank you !!! The information is so valuable and applicable !! 🔥🔥🔥🔥🙏🏽
Wow, thank you for all that effort in simplifying and explaining everything.
You’re my fave human bean ♥️
Liked before watching
THANKS!
The absolute best video I’ve seen you do. Beautiful job
These videos are super helpful - as someone tired of working a 9-5 and working towards financial freedom to work for myself and live a happier life, your videos are helping me make that change one step at a time towards the life I want. Time to go "like" every video you have!
Hey Graham this unrelated to this video but I just got my first student credit card 6 months ago and received my first credit score of 706 today! Wanted to thank you for getting me to do that! How often should I open new cards for more rewards? Thanks man
Congratulations! In the beginning, I'd probably open up new lines every 6-8 months or so and build up a solid foundation of free, no fee cards...then after about a year, start getting into charge cards like AMEX! Or churning for points!
@@GrahamStephan Will do I'll let you know how it goes thank you!
I created this exact video months ago. Except Graham gets 2342342342 views per minute while I'm over here eating Government cheese! WTF! lol
It’s crazy how that works. Ryan Scribner and I often do similar videos. One of us gets a ton of views on a video the other doesn’t. So weird!
@@GrahamStephan lol I know bro, I was just joking around. I'm going to focus on more evergreen content from now on.
Just from this comment I also subscribed to your channel and will also look into some of your videos. Keep making great content and they will come!
You both are awesome teachers.
Smashed the Like button for the UA-cam algorithm
hi, im a seventeen year old student and ive just registered for my first semester in college, ive been watching your videos almost every morning and i just have to thank you for sharing your experiences and your knowledge to people like me who are eager to learn more about real estate and investing but dont know where to start. i continously watch your videos and i have gradually become more and more invested in your channel. i am aware im still very young but hearing your first property story gave me a sudden rush of ambition, i dont have much money to start investing in anything yet, but i plan on ivesting in stocks as soon as i can, i would love to see more videos on how the stock market works and how you first started learning.
this was just super dope!- i'm stunned
There’s plenty of this type of videos. Can you make one about Loans. Specifically about how to get a second loan, after you have a primary and you want to invest in a second loan. The process .
Alekk try a home equity line of credit
Yes agree. Even ins and outs to get the first loan would be interesting. Especially NOW since interest rates are low
you're right. it wasn't cool. I'm glad you made it right
hahaha you got it
Thanks Graham! This was very helpful.
Thank you for posting such informative videos! I would be interested in seeing a video of you running these calculations on an average deal you find in your market vs the deals you put an offer on.
I see what you did there at 3 min mark. Using a png file on iMovie while you keep adjusting to each word. God you work hard Graham.
EXACTLY. Only way to do that on iMovie and it takes forever!
@@GrahamStephan get final cut ...
edit: but I use iMovie too though lol
@@GrahamStephan Just use Keynote lol, it wouldve taken like 5 minutes
love the breakdown but nobody in the comment section asked so i need to know: what city has a 3 unit renting for $1,000 each and only costing $360,000 to buy? please tell me what city this is in so i can start looking at property there.
You perhaps might have missed that this was just an example to showcase the formulas lol
Sacramento might
You're not kidding. Forget the financing, I'd like to pay cash for something that could cash flow like that at this point. But this video is a year old.
Providence Rhode Island, Worcester Massachusetts,
hey man, I've been thinking of trying out real estate investments someday but budgeting 1/10th of these given numbers and simply start small.. I also have been convinced about financing especially for 30 years while managing debt properly ( before watching your videos I was 100% against debt ).. thank you for what you do
So good bro. Great comprehensive video. Subscribed.
Gotta love cashflow! Cashflow + Appreciation is almost equivalent to Elon Musk hosting meme review
Elon NEEDS to host Meme Review
Hey Graham, For the total 12.5% return you forgot to subtract the annual infaltion of 2% which makes your 2019 $ worth less in 2020 by inflation percentage.
any thoughts on that ?
I didn't want to confuse cashflow by subtracting inflation!
@@GrahamStephan why aren't YOU liking these comments .. huh?
You have to consider that you will raise the rent and the property itself is likely to be worth more in future.
Graham, always condensing all of the best information into short and sweet videos! Cashflow is king - and credit is king when spending :)
Thanks for the info Graham!
New 2020 Movie in the Work - Avocado Warriors - The True Origin of the Toast-est With The Most-est.
I'll be first in line!
Did you see my last comment that went viral because I said avocado toast...
watch it happen again...
I've been there too, its an honorable sensation.
Awesome video! I always love how tenants can help you cash flow AND pay down your mortgage for you. Real Estate investing is King! Take care, Graham!
Great material as usual! Thank you Graham you've help me a lot in making consistent good investments. Love that Panerai btw. Have a very similar one myself.
Robert lacob is gonna have the top comment this video... mark my words
it's gotta happen
Your words are marked
@@GrahamStephan bet
Can you please make this video? “How To Invest In Avocado Toast The ULTIMATE Guide to Calculating Avocados (EASY)”
NOT CLICKBAIT - EXPOSING THE TRUTH ABOUT AVOCADO TOAST
Idk why but i still think you are a fat man behind the computer....
Nopal 458 hahah maybe I am...
@@viktoriya2145 Hey There chunky 😅😅😂
Graham If your not using your bonus points to travel where ever Viktoriya Tolkaneva is i'm going to be mad. She clearly wants the D bro. Go for it my dude.
This video is excellent. Thanks for sharing it with us! I transmit very well your passion!
Great video Graham! You left out appreciation in the profit.
I'm at my job, can't watch the video yet. Leaving a comment anyway.
FOR THE ALGORITHM!
Víctor J. Braga I’m watching at my job. Cuz fuck this pos job
doing your part
I’m at work AND I’m watching this video XD
4:03 LOL
;)
You SMASHED that video ! So i SMASHED that like button. The BEST video of yours i've seen so far. Now have you got one on how to select long term tenants? This was a VERY motivating video. Thanks for sharing !
Graham's got me! Every question I had a few has an excellent video!
12% is very high ROI. Expenses could vary over time depending on repairs/unexpected costs and it could be a lot higher than 1k. 3k rent is also fairly high for a 360k property. Usually I see 400k properties get around 2k. Overall it's good info, but the numbers will vary a lot depending on location and the numbers you used are fairly optimistic.
We have 120K unit making 1.5K so it can be done
If you're buying a 400k property that rents for only 2k, you're doing it wrong.
Liz Lammi so True 😂😂
6:10 **slumlording intesifies**
HAHAHA
@@GrahamStephan Cheers, I'm here all night, folks!
Thanks man, was about to compare both myself. Thanks again.
I love the details!!! Thanks for taking the time to do that. Please post more videos like that. Your attitude and transparency really separates you from the rest of youtubers.
Ah thanks so much!
2nd by a second :(
You were 1 second away from being first!
I thought I was playing smash bros but I watched Graham so I was playing smash likes.
keep inspiring us.. thank you Graham.. love from Srilanka
This is a wonderful video, thanks so much Graham!
That moment you scroll down to find out you are #3 because of slow internet😤
nOoOoOooOoO
I'll forever be thankful to you you've changed my whole life continue to preach about your name for the world to hear you've saved me from a huge financial debt with just little invstmnt, thanks so much Mrs.Damaris Diaz.
Wow, amazing to see others who trade with Mrs. Damaria Diaz, I'm currently on my 5th trade with her and my portfolio has grown tremendously.
Is this not the same Mrs Damaris Diaz, my neighbors are talking about, she must be a perfect expert for people to talk this good about her
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Thank you Graham your videos are very informative and educational. I am very grateful and I acknowledge that making these videos must be very time-consuming and difficult In order to put a quality product out there for us to learn from. And I thank you for that.
Thanks so much for watching!
Awesome video, as always Graham. Keep up the good work, we appreciate it!
thanks!
Something something avocado toast
Give me likes
done!
Graham Stephan thx
When you’re waiting for Shane Dawson’s new video so you come through Graham’s channel for some avocado toast and cash flow hacks!
Is he posting today?!
Graham Stephan all of my faves are literally posting today including you king 😩🙌🏿🥑
That's the video I've been waiting for! Thanks my friend! Like button SMASHED!
Amazing very detailled and well explained. Only one in youtube giving real info
Pretty sure I just learned more math In 13 minutes then my whole 4 years of high school.
Real estate ain't bad at all but I'm shocked with what I'm realising from stock market through the help of Mr. Gerrald Hamilton.
O yes I'm on the same page, depending on govt won't make anything better. My survival today was when I signed in to Mr. Gerrald Hamilton Hamilton trading services.
I'm close to millions already by investing with Mr. Gerrald Hamilton. I pulled out $50,000 last week after an active supervision from Mr. Gerrald Hamilton Hamilton services.
Wow ,this amazing success then ,how do I reach this dude?
I'm overwhelmed with joy and happiness seeing other investors of Mr. Gerrald Hamilton, that's enough indication I'm at the right place. He grew my token to $1600 in 2 weeks.
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He's at
Thank you so much for posting this, I'm looking forward to starting my real estate career!!
awesome!!
Thanks for this. I cant believe I didn't understand this before. Thanks!!
Ughhhh youtubeee
Late notification? :(
I got mine late as well, my phone got notified seconds before my computer did.
Amazing video, thank you Graham
Watching your ads while writing and drawing out your chart and smart ideas. You Are Great Stephen.
😂🙌🏼
You are simply the best, thank you bro.
Thank you for this video!!
Thank you ❤ very helpful
Awesome video Graham! I’ve been learning a lot from you.
This was the most detailed explanation on rental property investment video I’ve watched.. and I’ve watched a few. Liked & subbed!