Let's talk about Calculating Numbers on a Rental Property [The Easy Way]. This is a proven model that we've been using to analyze our rental property purchases. Keep in mind, we do this BEFORE we buy a rental property. If you're looking to buy your next rental property, you can use our analysis method to determine whether you're going to have a positive cashflow or not.

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When calculating numbers on a rental property, we first start with the Gross Market Rent. Now you can get an estimated market rent from a tool we like to use called "Rent-O-Meter" (http://rentalcomps.thekwakbrothers.com). Be mindful that when determining the market rent that you are comparing "Apples-to-Apples". Same bedroom counts, same bathroom counts, similar square footages, etc. 

Second, we subtract the following expenses. Now, if you have an exact figure for what the expenses are going to be, the better. But... For just an estimate, we account for these expenses:

1) 10% of gross rental for Management Cost (whether you hire out or you do it yourself)
2) 10% of gross rental for Maintenance (also for reserves)
3) 8% of gross rental for Vacancy Reserves and Costs
4) Property Taxes (1/12)
5.) Estimated Insurance Cost - You can call your insurance agent/broker to get an estimated quote for the rental property.

The final number should be your Net Operating Income or NOI. This is the final profit before debt service (mortgage payments). 

Now of course, we have to factor in debt service (in other words, debt payment). You're going to take your monthly NOI and subtract it by the monthly debt payment. This will give you the Cash Flow you earn each and every month.

If this number is negative, you may have to re-think your deal. 

If this number is positive, congratulations! You have positive cash flowing deal!

The Kwak Brothers are millennial real estate investors who have acquired over 76 Units of Rental Units and have raised over $20,000,000 in capital for their real estate deals. They are based out of the Chicago-land area and they are dedicated to helping ordinary people become real estate investing champions and rockstars! They specialize in owner financing negotiations and multi-family rentals.

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---DISCLAIMER--- The suggestions, advice, and/or opinions that are given by Sam Kwak (The Kwak Brothers) are simply opinions. There are no guarantees of set outcomes. Listeners, guests and attendees are advised to always consult with attorneys, accountants, and other licensed professionals when doing a real estate investment transaction. Listeners, guests and attendees are to hold Sam Kwak, Novo Elite, Inc. and the Kwak Brothers brand harmless from any liabilities and claims. Not all deals will guarantee any profit or benefits. Listeners, guests and attendees are to view and listen to all materials and contents furnished by the Kwak Brothers as a perspective based upon experience.