From the category archives:

Financial Analysis

House #2: Purchase/Rehab Costs

September 16, 2008

Now that The Bulge House is officially on the market, I decided to do my final accounting to determine how much I’ve spent to both purchase and rehab this property (which I can then use to model my profit based on my holding and selling costs). While I didn’t define a formal budget for this […]

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Pro or No?

September 2, 2008

One of the decisions I need to make this year is whether or not I plan to file taxes as a “Real Estate Professional.” For those not familiar, let me take a minute to explain the advantages of claiming professional status: If you invest in real estate part time (not a professional), you may be […]

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2% Rule for SFH

August 23, 2008

Here’s another rule of thumb that’s popular with investors who focus on single family houses. And again, this is a good rule of thumb to use to perform a quick, first-pass financial analysis on an investment to determine whether it’s worth looking at further. The 2% rule states that, to make a good profit on […]

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50% Rule for SFH

July 16, 2008

The 50% rule is a rule of thumb to do a very-quick first-pass analysis of a single family investment (rental) property. The rule states that — on average — the total expenses associated with operating a SFH investment will be about 50% of the gross rents. The expenses included in the 50% are things like: […]

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Cash Flow Analysis for SFHs

July 1, 2008

In my last post, I discussed the two major investing philosophies among SFH investors: Cash Flow vs Appreciation. As I mentioned at the end of that post, I tend to focus on the cash flow side of the investment, and hope that appreciation takes care of itself in the long run. So, that said, I […]

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Why Cap Rate is Important

June 17, 2008

While I have devoted an entire section of this website to financial analysis of real estate, there are some financial concepts that I feel are of broad enough importance/interest that I want to post them in the main blog. Discussion of capitalization rate (or “cap rate”) is one of those such topics. I explained in […]

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What is a Fair Price?

June 16, 2008

My dad called me the other day…he was reading my blog and following my real estate adventure, and was curious about something: When you’re new to buying apartments, how can you confidently determine a reasonable price for a particular property? Surprisingly, it’s quite simple (it often requires a lot of work, but it’s not complicated). […]

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The Value Play

May 31, 2008

One of the most lucrative strategies in apartment investing is what’s called the “Value Play” (or “Value Add” to some people). Because I plan to make the Value Play one of the cornerstones of my investing strategy, I wanted to spend some time explaining what it is, and why it can be so lucrative. At […]

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The (Other) Golden Ratio

May 30, 2008

This post is about the Golden Ratio. You may have heard about the Golden Ratio in mathematics and architecture, but thatâ€™s not what Iâ€™m going to talk about. Iâ€™m going to talk about the other Golden Ratio â€“ the one that applies to apartment investments. You probably wonâ€™t see it referred to as this anywhere […]

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