Once you know how to calculate rental property returns, you can buy more, invest smarter, and scale your portfolio faster. Most new investors get hung up on the numbers, but veteran investors like Dave Meyer know which formulas to use for which scenarios throughout different deals. Knowing these formulas has allowed Dave to build a high-value, passive investing portfolio. And today he’s teaching you how to do the same.
But before you break out the BiggerPockets calculators, you’ll want to know what you’re calculating. Most investors only look at one (maybe two) metrics when analyzing real estate deals. But this sloppy way of calculating rental property returns could cost you money in the long run. Dave argues that you need to ask why you’re calculating each number before doing the math.
That means if you’re comparing two deals, you shouldn’t just use cash on cash return. Or, if you’re debating selling a property to buy another, you look at the return on equity, not just the difference in cash flow. But how do you know which formula to use for which scenario? Worry not! Dave brings along the “Metric Matrix” that will help alleviate any worries you have when analyzing your first (or next) rental property!
00:00 Analyzing Deals Doesn’t Have to Be Hard
02:17 Dave’s New Book!
03:12 Which Metrics Really Matter?
04:48 1. Cash Flow
06:02 2. Return on Investment (ROI)
07:34 3. Annualized ROI
09:14 4. Internal Rate of Return (IRR)
10:35 The Metric Matrix
12:09 Grab “Real Estate by the Numbers”
Join BiggerPockets for FREE 👇
Pre-Order Dave’s New Book and Use Code “DAVE” For 10% Off!
Find an Investor-Friendly Agent in Your Area:
Try the BiggerPockets Rental Calculator on Your Next Deal:
Watch Dave on the “On The Market” YouTube Channel:
Check out Last Week’s Episode on The 4 Ways Real Estate Will Make You Rich:
This May Be The Most Important Metric To Know:
11 Essential Real Estate Metrics Savvy Investors Should Know:
Connect with Dave on BiggerPockets:
Follow Dave on Instagram:
@thedatadeli or https://www.instagram.com/thedatadeli/