Hey everybody, it's Brandon. So, I was just on the phone with a gentleman who was looking to invest in Waco, Texas. And so we were just talking about Waco a little bit.
So I pulled up Reelder.com and I looked at the prices and I thought, hey, actually they're not that bad here. And then I thought, when I got off the phone with them, I'm going to run the numbers and just kind of see what Waco looks like for a small multifamily. And then I thought, hey, why don't I record it and then put it on my Instagram so other people can kind of see what I'm doing. Sound good?
So this is what I'm doing. I went to realtor.com, which is one website to find properties. I typed in Waco, Texas.
I search and I up here at the top, I chose property type multifamily. Let's do that. And then I don't want to see the ones that are already pending or contingent. So I'm going to hide pending and contingent.
So now I'm left with just properties in Waco, Texas that are multifamily. So we've got things from 750, 335, 239. It's kind of a cool looking property. Uh, three 25, it's kind of all over the place, right? Um, I liked, and then there's this one on the right side here. And this is the first one I have not analyzed it yet.
We're doing this live right now, but, uh, I saw this one and it said $280,000. And there's another one here on the left. It looks like, uh, and I thought this looks interesting because of the two car garage. Typically this layout I like because usually not always, but many times the water and the sewer is separated because these are newer properties. I mean, this was built in 2004. So So chances are the water meters are separate, which means I, as a landlord, don't have to pay water, which is always great for multifamily.
So I wanted to analyze this deal. And again, I just wanted to wait for you all to watch me do it. So there are no interior pictures, so I have to make some assumptions today.
So please don't go buy this deal just because I analyzed it. But here's what it says. Great opportunity in Cougar Ridge to get your own home. Cougar Ridge is funny.
And investment property at the same time. This single story brick duplex features two three bedroom, two bath units. located in coveted China Springs ISD. So it must be like a coveted school district.
The units feature open floor plans with laundry hookups, two-car garage, fenced backyard for residents to enjoy. The Lake Waco Trail is just a short ride away and provides a great way to relax. You don't want to miss your opportunity in one of the growing areas of Waco. So I don't know anything about Waco, but this looks like an interesting property to run the numbers on.
So is that all right? Can we do that together? So I am going to go over here.
to biggerpockets.com. I'm going to click on tools and navigation bar. It brings me to the calculators. We've got like five main calculators, fix and flip, rental, BRRRR, wholesaling, and rehab.
This is basically a rental. It's already fixed up, I'm assuming. So let's go just basic, the rental property calculator for buy and hold. We're going to call it a title. I'm just going to burn through this real quick, not explain everything that I'm doing.
The Waco, Texas duplex. The address, I'm just going to copy and paste the address. So in this case, I already copied it into my... Clipboard, so there it is.
Just doing some basic copying and pasting at this point. Everyone here should be able to do that. And taxes. Oh, I don't know what those are.
Well, you know, I'm going to go over to Realtor.com. I'm going to figure it out. So if I scroll down Realtor.com, oftentimes it'll tell me. There it is.
Taxes, about $6,000. Just shy of $6,000. So I'm going to go and go $6,000 on this one.
I can add a photo. You know, why not? I like adding photos. So let's add a photo in there. And select our file, go to my desktop, there it is.
Description, I'm just gonna put what the, what the agent had wrote here, that's good enough for me. And that's it for page one, let's go to page two. What's it, what's the purchase price? Well, let's start with what they're asking.
They're asking 280, $280,000. What's it worth when it's all fixed up? Well, it probably is fixed up, so let's do that. If you don't know how to find that, hover over the question marks. Closing costs, let's call it $4,000 in closing costs.
Repair costs, does it need any repairs? There's always something. Let's call it $2,000.
I don't actually know. And I'm gonna put down a 20% down payment loan at 4.5% interest. I'm gonna go amortize on a 30-year loan.
I'm not gonna do the other ones for now, just to keep this quick and dirty. Now, what are these units rent for? Well, I'm gonna go over to Rentometer.
Let's go to Rentometer. That's a site that I use for quick and dirty numbers. And let's put in the address here. And let's see what they say on Rentometer.
For a, is like 1200, I'm wondering, 1200 for a three bedroom house or duplex. Is that appropriate? Well, let's find out in this neighborhood.
So according to Rentometer, I just guessed at it, but 1283 is average. Median is 1350. So we could potentially get up to a $1,350. That's good to know. In fact, a four bedroom is up to 1653, which is crazy. That's good.
So this is a high rent area. I'm down below that I can look at some of the other properties to kind of see like, you know How similar those are to mine but for quick and dirty right now, let's go 1300 I'm gonna go a little higher than the average because this is probably gonna be a little nicer And it's got that, you know, the the two-car garage and all that but I'm not gonna go quite median So let's go 1300 to keep it conservative right now let's find my Where's my there it is. So let's go unit breakdown at a unit a at a unit B and go 1300 each Does the listing say sometimes the listing will say what though what their current rent is?
Yeah, it doesn't really say that's okay Let's see go back over here. Are there any income? Is there like laundry income or anything like that?
Probably not now remember or I said earlier the reason I like side-by-side duplexes typically I think I said this earlier. If not, the reason I like side-by-side duplexes, especially newer ones, is usually the water and sewer lines are separated. I'm going to assume that's the case here, that the water and sewer lines are separated. And I'm going to go ahead and just say that each tenant will pay their own electricity. The tenants will pay their own water, sewer, and garbage.
I'm going to have to pay insurance. Probably going to run me about $800 a month. And then I may... In this case, I probably won't. Sometimes on duplexes, you have to do the lawn care, but because they have their own garages and because they have their own yards, I'm going to make them responsible for their own lawn care.
So I don't have to worry about that either. Now, vacancy, I usually do around 5%. Repairs and maintenance, anywhere between 5% and 10% of the rent.
So 5% of the rent to 10% of the rent, depending on the age of the home. Now, this is a newer property, so I'm going to go 5%. Same thing for CapEx.
This is like big... ticket items we're going to save up for a new roof every 20 years, new plumbing every 40 years, new windows every 30 years, new appliances every 10 years. CapEx is just saving up for those items.
I'm going to hire a property manager, 10% to manage the rent of that one. And then I'm going to assume that we're going to grow by, let's call it 2% income growth, 2% property value growth, 2% expense growth. And someday when I sell the property, I got to pay a real estate agent in closing costs.
That's sales expenses someday. Let's calculate the results and find out what happens. Here we go. Five, four, three, two.
I have no idea. My guess is it's not going to be a very good deal as is, but what I got, like I always say, every property has a number that could make it a good deal. Every property has a number that could make it a good deal. Let's find out.
So here we go. Based on our numbers, we just ran monthly income of 2,600 a month, monthly expenses 2,384, which means our cashflow, our estimated cashflow is 215 bucks a month. Not terrible. If you recall from my criteria thing the other day, I said I want to get at least $100 per month per unit is my like baseline. Well, 215 qualifies, but remember my cash on cash return percentage?
I've said it twice now on Instagram lately. I want a 12% return. I am not anywhere close to 12%.
So you know what I'm going to do? I'm going to start crying and say there's no good deals in my market and go back to watch The Bachelor because I think that starts soon right after Dancing with the Stars gets done. Bye guys.
Kidding, of course. Every property has a number. So let's find it. Edit report. Let's find another number.
Instead of paying 280 for this property, what if we were to pay 230? Let's go crazy. 230. Now, I know people are saying they're not going to take a $50,000 discount.
Probably not. You never know, right? And this also shows why off-market deals are usually better. Let's check it out though. Check this out.
At 230, we're still only at a 9.6% cash on cash return. but our cashflow has bumped to 417. So we're getting closer. Now, if I was getting a $50,000 discount, I might be okay with a 10% return.
So we're probably getting close. Let's go, let's drop it even more. So this property, let's go down to 210. Again, I doubt they're gonna take that, but it's worth running the numbers and finding out. It's also why I like the BRRRR strategy because BRRRR, you can usually get better deals. But just a turnkey duplex like this.
Now at 210, I'm at the 12.47. So I'm probably at like a 220. Now they're asking 280. I'm probably around a 220 to make this deal worthwhile. Now, granted, if I believe that this market's going to appreciate really, really hot, then maybe I would have accepted a lower cash in cash return, maybe, or maybe other reasons. But looking at this chart, like year one, two, five, 10, 15, 20. I mean, if I bought this property at 210,000, held onto it for 15 years, Look how much profit I'd have if I sold it.
Over the course of those 15 years, 300 grand in profit is a 14.35% return. I can see my equity climbing and I can see my loan getting paid off. I can see my property value going up over time. I see my cashflow going up every year, hopefully. So I'm making about six grand a year from year one.
That goes to almost 7,300 by year five, by year 10, up to 9,000. So you can see it going up over time. So anyway, just kind of a cool way to look at the deal. So this deal to me, this duplex, I'd probably pay somewhere in the 220, 230, maybe 240 range. You know, maybe accepting a slightly lower cash in cash return.
But maybe you're fine with that. Maybe you're good with a 5% return and you can pay the full 280. I don't know. I'm not going to tell you what to do and what not to do. But the one final thing you can also download, if you don't know this with the BP calculators anyway, you can download a PDF report like this. And it shows you all those numbers nicely and neatly so that you can show a lender, a portfolio lender, a hard money lender, your spouse.
You can show anybody you want, your partners that you've done your homework. And this makes me feel really good. So before I make an offer on a property, I like to do this. So there you go. That is how I run the numbers quickly and efficiently and easily and accurately on rental properties.
And so it looks like in Waco, you know, it's not the end of the world. They probably would say no, but that's why this is just a numbers game. It's just a numbers game.
So I might make an offer on this property and they'll probably say no. But later on, maybe they'll say yes. If I offered on it, maybe this has been sitting on the market a while. Or maybe I need to find a fixer upper so I can build that equity in and get my cash and cash return higher because I'm going to do the BRRRR strategy. I don't know.
Anyway, if this was helpful, make sure you give that little thumbs up button or a little heart button below this video. Whatever you got to do. And follow me, follow us at BiggerPocketsEverywhere. Follow me personally on Instagram at BeardyBrandon if you're not. And I'm gonna get out of here because my little girl just made some snickerdoodle cookies and she's making me a heart-shaped one because she loves me.
Thank you so much. You guys have a great day. Bye.