Welcome to short-term rental riches will discuss investing in real estate but with a specific focus on short term rentals quick actionable items to acquire manage and scale your portfolio I’m your host Tim Hubbard.

Welcome back to the short-term rental riches podcast we just entered a new decade a new decade can you believe it 2020 before we get in today’s topic I just want to take a quick second and ask you if you have written your goals down do you know what your year 3 year 5 year goals are and do you have them written down or they just thoughts or ideas or dreams really that you would like to happen.

If they’re all in your head still you know what they say those goals are really just dreams and once you write them down however they become a reality create an action plan and then things actually start to happen and it does really work the more detailed you are with your goals.

The more thought you put into them the more you reflect on them the more that they’re going to happen the more you can achieve and the happier you’ll be so not too often too much of a tangent but I just want to bring that up since we’re off to a new year today we’re gonna talk about one of the core actually the core principle to any investment and and determining whether or not that investment is worthwhile for you and and really this goes beyond just real estate this this works for any industry.

And what does it all come down to what comes out of the numbers you know you have to have your own criteria with an investment for what makes sense to you what you would like your return to be and if the numbers don’t offer that return then you should do the deal you should keep looking sell I just want to illustrate this principle with there are a rather large deal that we made 2 years ago while I was working as a commercial broker with investment properties.

Let me just give me a little brief recap we it was a syndicator a client of ours that was looking to purchase some apartment buildings and big apartment buildings and mean there were at least a couple 0 units each and had a very very big budget so we spent the day out looking at properties and evaluating them in and running the numbers and then at the end of the day we came back to the office and there was 2 properties in particular that our client really liked my boss at the time asked me to write up an offer now we had a rough idea but we weren’t actually I mean we had nailed it down to the dollar because we needed a plug things into our analysis sheets and run some numbers but at the end of that we did come up with a number now my boss’s name is Gary asked me Hey Tim write up an offer for those 2 properties and then let’s go over it so he went back in his office I went back to mine and I ran the numbers and I came up with what I thought made sense he came out of his office and said would you come up with and I said 67000000 which to me you know I was a young box it was like wow can you believe these numbers are coming out of my mouth but there are big properties and this was in California and she looked at me and with a little bit of hesitation. Either.

Either said 675 her 68 I mean it was very close to what I’d come up with and then you watch back in his office and I change the numbers and we submitted the offer and now I wanted to illustrate that just to let you know that it really does come down to the numbers and to think that that deal was so large yet the number I came up with and the number Gerry came up with were so close it’s just a good reminder that you have to have some structures in place.

When you’re analyzing a proper you need to know what you’re comfortable spending and if the property that you’re offering or the property that you’re interested in in purchasing doesn’t meet those numbers then you don’t do the deal and so in a nutshell I mean when you break down all these analysis sheets and all these things it’s really no different than a between a a $50000 property and $50000000 property they both have income they both have expenses the larger properties obviously are going to have a lot more expenses and a lot more things to consider but at the end of the day it comes down to how that property is performing how you can expect that property to perform based on market data based on comparative roles and the due diligence that you’ve done so I just wanted to illustrate.what little principal to let you know that there there really isn’t there’s a science behind this is not something that you want to be emotionally attached to.

Now in the short term rental world we have guests staying with us from all over and they may become emotionally attached to your property after you’ve created a short term rental and and they had a great experience there but before you acquire that property you can’t be emotionally attached to it you have to look at the numbers and they don’t make sense it’s not a deal you should do and now this this works for the lease arbitrage model even too so if you’re planning on leasing a property and sublease in it making the difference it’s the same thing you’re going to run this down to the numbers a good way to analyze all the numbers you know maybe saying I don’t have the resources or whatever but there are so many tools online now you can just go on Google and type in property analysis spreadsheet or you know investment property excel sheet something like that and you’re gonna find a tool that you can use to help you run these basic numbers and then you know once you’re doing this over and over it’s really only gonna take yeah at a glance you build the tell of something even close to meeting your criteria before you waste a bunch of time on something you know that doesn’t make sense so just remember when you’re looking at potential properties run the numbers have your criteria know what you want turn on a property and if that potential property does not meet your criteria then keep on. I hope you have a wonderful.

Want to get on the fast track to financial freedom through short term rentals little search of the property you want to make sure that you fired right. I want to give me my share. Yes there is no charge to make it to you for being one of our subscribers just go to rest methods.com R. E. S. T.. methods.com.

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• Episode 62: Professional Tax Advice From My CPA – Part 2
• Episode 61: Pro Tax Advice directly from my CPA (part one)
• Episode 38: Is a Short Term Rental the Best Use for Your Real Estate‪?‬
• Episode 26: Our Future Work Environment (And What It Means For Your STR‪)‬‬
• Episode 09: Searching for a Property? Use a Broker or Real Estate Agent‬‬