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150: Rookie Reply: Which Rent Numbers Can You Trust When Analyzing a Deal?
Manage episode 318245069 series 2632451
Ashley and Tony’s Instagram DMs have been blowing up! This week’s question comes from Collette through Tony’s Instagram direct messages. Collette is asking: Do you make offers based on pro forma or actual rent numbers?
If you’re a real estate rookie or a residential-only investor, this may be the first time you’ve heard the term “pro forma” before. A real estate pro forma is simply a spreadsheet or document that projects the estimated financials on a property once capital expenditures, rent increases, or other improvements have been put in. So, should you trust those numbers?
Here are some suggestions:
Remember to “trust, but verify” and always run your own numbers on projected income
Use multiple different investor scenarios: pro forma, current numbers, worst case, etc.
Take into account the holding cost of performing a large rehab on a commercial property
Calculate your working capital and CapEx budget needed to acquire the property successfully
And more in the episode…
If you want Ashley and Tony to answer a real estate question, you can post in the Real Estate Rookie Facebook Group! Or, call us at the Rookie Request Line (1-888-5-ROOKIE).
Links from the Show
Real Estate Rookie Rookie Facebook Group
Real Estate Rookie Youtube Channel
Rookie Podcast 103: From Restaurant Waiter to 100+ Deals in Only 4 Years w/ Derrick Acuff
BiggerPockets Calculator Reports
Check the full show notes here: https://www.biggerpockets.com/rookie150
Learn more about your ad choices. Visit megaphone.fm/adchoices
468 episodes
Manage episode 318245069 series 2632451
Ashley and Tony’s Instagram DMs have been blowing up! This week’s question comes from Collette through Tony’s Instagram direct messages. Collette is asking: Do you make offers based on pro forma or actual rent numbers?
If you’re a real estate rookie or a residential-only investor, this may be the first time you’ve heard the term “pro forma” before. A real estate pro forma is simply a spreadsheet or document that projects the estimated financials on a property once capital expenditures, rent increases, or other improvements have been put in. So, should you trust those numbers?
Here are some suggestions:
Remember to “trust, but verify” and always run your own numbers on projected income
Use multiple different investor scenarios: pro forma, current numbers, worst case, etc.
Take into account the holding cost of performing a large rehab on a commercial property
Calculate your working capital and CapEx budget needed to acquire the property successfully
And more in the episode…
If you want Ashley and Tony to answer a real estate question, you can post in the Real Estate Rookie Facebook Group! Or, call us at the Rookie Request Line (1-888-5-ROOKIE).
Links from the Show
Real Estate Rookie Rookie Facebook Group
Real Estate Rookie Youtube Channel
Rookie Podcast 103: From Restaurant Waiter to 100+ Deals in Only 4 Years w/ Derrick Acuff
BiggerPockets Calculator Reports
Check the full show notes here: https://www.biggerpockets.com/rookie150
Learn more about your ad choices. Visit megaphone.fm/adchoices
468 episodes
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