There are 3 main things that you need to know about when it comes to figuring out how much money you are going to make in real estate.

????1 on 1 Talk + My Budget + Stock Investments????
https://www.patreon.com/tommybryson

????MY M1 FINANCE PORTFOLIO???? PLUS $10
Link: https://m1.finance/fQsrul1PZcHM

1. What is Exactly is Cash on Cash Return
– And before I even break that down, what exactly is ROI
– ROI is your return on your investment ( so how the money will you get back you invest money )
– And using the Cash on Cash Return formula we can figure how much money our investments will be making
– Now remember one thing, you want to make somewhere between 8% modest to 12% good and 20% awesome.
– But anything below that usually you could have made more money somewhere else ( remember inflation is 3%)

Cash on Cash return:
– This is a formula to figure out exactly how money the cash you have the investments ( real property is earing you or going to earn you annually on the property you bought or plan to buy )
– So the formula is basically annual cash flow/money in the deal
– So if a property cashflow $100 months and earns you $1200 a year and you only have $15,000 in the property ( $1,200/$15,000 = 8% which is pretty good )

Now lets do an example:
– Property Cost: $179,000
– Down payment 20%: $35,980

Information we need:
Rent = $1,300
Tax = $159
Insurance = 63
Mainenance = $75
Management Company = 10% of gross rent $130
Mortgage = $622
Vacancy = 5% of rents ( $65)

Monthly Cash Flow: $186
Annual Cash Flow: $2,232

Cash on Cash Return: Annual Cash Flow/ Money in the property
= $2,232/35,980 = 6.2%
Without property manager = 10.53% which is a lot better

You can raise this by:
– Putting smaller down payments
– Looking for a better property with better numbers
– Lower your expenses any way you can

For me honestly:
– I would aside 2% of the property value for maintenance asap
– And set 1-1.5 months for a vacancy for vacancies (

Tip: check google maps

2. Caprate return
– This is the number that I’m most interested in
– Because for this number it tells you you’re return on your total money
– If you don’t have debt on the property for example no mortgage
– So the questions this answers is: if I pay cash for this property, what would my return be
– 10-12 is solid ( but depending on your area 6-8% could be good )

Cap rate return:
– Would be my cash flow/my total money in the property
– And obviously, since you are paying cash ( the total value is what you paid for it )
– What we trying to figure out is, how hard is my money work for me

Now let’s do an example:
– Property Cost: $179,000 ( paid in full )

Information we need:
Rent = $1,300
Tax = $159
Insurance = 63
Mainenance = $75
Management Company = 10% of gross rent $130
Mortgage = $0
Vacancy = 5% of rents ( $65)

Monthly Cash Flow: $808
Annual Cash Flow: $9,696

Caprate: Annual Cash Flow/ Money in the property
= $9,696/179,000 = 5.41% ( which is not that great at all)
Without property manager = 6.28% which is a lot better

However:
– If we do what I said, which just keep money on the side for all the things we expect, like maintenance and vacancies
– Then our new cap rate would be 7.22%
– On top of that property depending on the locations should also be increasing in value

3. Now last the third thing to figure out is what your goal is with these properties
– Do you want to hold and let it appreciate then sell at the top of the market if it works
– Do you want to fix and flip
– Or do you want to hold forever

Advice:
– Is it going to depend on the location of the property
– How much money it earns you
– And how you are as a person ( I’m the long term type and I don’t like all the debt stuff )

My Strategy:
– Buy property with a cap rate of 8-12% and hold on forever ( or until it stops making sense )

* PRO TIP*
INFORMATION IS EVERYTHING

????Merch????
https://teespring.com/stores/tommybryson

✅2 FREE AUDIOBOOKS✅
https://amzn.to/2Enayo8¬¬¬

????M1 FINANCE $10????
Link: https://m1.finance/fQsrul1PZcHM

????ACORN FREE $5????
Link: https://acorns.com/invite/38EYSU

⚡FREE KINDLE UNLIMITED⚡ (traditional reading)
Link: https://amzn.to/2VGbxt9

????????‍????DISCORD PRIVATE GROUP????????‍????
https://discord.gg/EcZEHpA

My Camera Gear: https://www.amazon.com/shop/tommybryson

✔ Help Us Reach 500,000 Subscribers: https://goo.gl/0wvm6w

????All My Social Media????
Link: https://linktr.ee/tommybryson

*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

source