150: Rookie Reply: Which Rent Numbers Can You Trust When Analyzing a Deal?

2022/1/22

Real Estate Rookie

Frequently requested episodes will be transcribed first

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).

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Real Estate Rookie Youtube Channel)

Rookie Podcast 103: From Restaurant Waiter to 100+ Deals in Only 4 Years w/ Derrick Acuff)

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