I would like to run the same standard analyses on each individual house that I am interested in buying.
Theres a simple process to follow.
- get how much rental income the property generates
- estimate monthly expenses as a percentage of the monthly rent (i.e. large expenderatures like capex I use 10% of the monthly rental income to set aside)
- determine what my monthly mortgage, downpayment would be at offer price,
- determine what offer price is needed to obtain a targeted monthly cashflow mumber
Many people will tell you that you buy a house for it to appreciate, and that's when you make your money. But if the bottom line cashflow number isn't positive, then you own a liability, not an asset.