If you want to know how important the numbers are when investing in real estate, it is similar to the analogy people use when working out.
90% is about your diet, the other 10% is about actually working out.
With investing in real estate, I'd say it's very similar, 90% is about the numbers, and 10% is the rest.
Once you know how to analyze a property, to
determine if it will produce a good return on your investment, produce a good cash on cash return, have a short payback period, among other financial calculations you can use, you're golden.
Now, I get it, analyzing a property can be confusing, because there are so many calculations being thrown around...
However, here's my advice:
Don't think you need to use all those fancy calculations that you've read about, or hear other investors using.
Just stick to the basic ones and you will be fine.
On all the spreadsheets I've created and use when analyzing a property, I focus on only a few financial calculations; Return on Investment (ROI), Cash on Cash ROI. and Payback Period. (Watch this video to learn more about these)
I know other investors like to use IRR, or Debt Coverage Ratio, or Net Present Value (NPV), which is one I would recommend you learn and use for certain situations.
In my Analyze All Properties Program, these spreadsheets take all the guesswork out of analyzing a property, all the manually calculating involved, and help you to quickly determine if the properties ROI is high enough, if the cash on cash ROI is high enough, what the payback period is, among other financial calculations you need.
They really have been a life saver for myself, as well, my spreadsheets tell you if the actual number is a good number, based on the goals I use when investing in real estate.
These goals, these rules of thumb that I developed and follow myself, will help you in knowing for sure if the property is a good investment.
That was the hardest part for me when I started investing in real estate.
Sure, I could do the calculations, but I didn't know what the numbers meant, if the result was in fact good.
So, if you want to start analyzing properties right away, to start growing your real estate portfolio, to get yourself out of analysis paralysis, then my spreadsheets, my Analyze All Properties program, is the answer.