Advice on properties
Hey, I was wondering what are some of your strategies about picking properties and deciding their real value. What do you look for and what is the math you use for it? 
[{"id": "cizhh5e", "text": "Quick and dirty if I'm in a hurry? (Gross rents X .6)/whatever return you're looking to get.\n\nIf gross rents are 100k, figure you net $60k after expenses &amp; vacancy. Looking for 7% return, then it's worth $857k. \n\nThis is a grossly over simplified way to look at it but it's what I do in my head when I see a deal for the first time. If it's multi family residential then I go with 50% expenses, not 40%.", "replies": [{"id": "cizhp42", "text": "how do you decide the return? ", "replies": [{"id": "cizlqu7", "text": "Whatever you're comfortable with. Extremely risky: 15%, average risk: 7%, super safe: 5% as examples.", "replies": [{"id": "cj07llu", "text": "Pro forma gross income can be pie in the sky, while schedule e figures can be exaggerated down low. Find a common sense average income between the two and then try and determine cash flow risk against sensitivity analysis, E.G.  what if management fees go up 2%, what if vacancies are at 12% for 2 months, what if 3 ac/heater units blow out during a hot July?  You should try to find investment buildings that can at least break even during the tight months, that will give you an idea of the discount rate you should be close to.  It gets more complicated, but its a good place to start.\n\nOtto's calc above is pretty much where I start as well, there is no hard/ fast rule for each buildings risk/cap/discount rate. I generally raise a listings cap at least 1 % when I'm looking at potential property and then evaluate from there, u find your own system after a couple.\n\nHope that helps.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]