Calculating Numbers on a Rental Property [Using The Four Square Method!]

98 thoughts on “Calculating Numbers on a Rental Property [Using The Four Square Method!]

  1. $200 a month for a property manager? I don’t understand this.

    Can someone please explain it?

    I thought a property manager is like an on site manager that will answer tenants needs 24/7.

  2. Jesus dude, you could of abbreviated all that crap and cut some time off the vid. About the only thing you abbreviated was ROI. Good info, good vid.

  3. Great video. Just a heads up. What you call income is actually revenue. What you call cash flow is actually income.

  4. 14:24 "budget" = "but shit" – closed caption fail

    Seriously though, awesome information. I downloaded the shit, I mean the sheet. Thank you.

  5. Guys/gals,

    There is a 40 unit multi complex investment deal in the works right now, if anyone is interested in investing some capital into a piece of real estate. let me know. thanks!

  6. I know he touched on it a little near the end of the video, but appreciation and mortgage pay down is the icing on the cake.

  7. This is a terrible terrible example….no property at 200k will have 2k income…missing a lot of expenses…total bs video

  8. I'm starting a real estate salesperson position at the end of July. And, I wanted to know what's an easier to understand the percentage of the total cash on cash ROI? What is a percentage that is worth fulfilling since 9.36% is high for a 200,000 Property establishment?

  9. Typically the homeowner pays the water bill forgetting about what if your residents use $100 of water each month. And you are forgetting a few other things

  10. Thank you. I’m new to property stuff but I’m learning a lot here in your channel. New sub here. More power! 😊

  11. $50,000/$ 4680= 10.68 years. So, it is going to take more than 10 and half a years just to recuperate your initial $ 50,000 investment! Don't forget your real estate could depreciate too.

  12. Not accurate….you forgot the most impotant things like tax savings for your write offs like depreciation, closing costs, management fees and more. How about principle paydown of the mortgage and property value appreciation. +or-.

  13. Thanks Brandon, the information is very helpful. I am not a real estate agent but have money I want to invest into real estate. Your break down is clear and to the point.

  14. Do landlords in the US pay for all the expenses on a rental property? It's usually just rental income minus mortgage payment…?

  15. Some people just sound so retarded when they ramble and ramble on like they’re speaking to a bunch of 3rd graders.
    Forget the like and subscribe bullshit just get to the point and then I’ll decide to like and subscribe, you don’t need to beg me to like and subscribe., Usually I just click off the video because if the 1st thing I hear is like and subscribe the video, usually that person doesn’t have a fucking clue of what they’re talking about, they’re just trying to bullshit you into watching the video all the way through while getting absolutely nothing out of the video.
    If I were a true businessman I wouldn’t have time to make YouTube videos. LOL 😝, just saying. NUFF SAID.

  16. With stocks u mostly have around 5% maybe? Idk i dont do stocks. But if i look at my cryptocurrencies my investment went 300% 🤣 how many cash on cash ROI is good to beat that. 😉 good video .

  17. If you learned anything from this video, you have no business investing in anything more complicated than your piggy bank.

  18. You’re writing ✍️ is getting smaller….which is amusing……my eyes aren’t that good. But your advice is spot on. It’s easy to jump when things are selling fast. I was going to buy a duplex which came on the market while I was on the MLS and went under contract before I got off. So it’s a balance and it’s best to know your market well…..then you can jump on it with confidence.

  19. This also teaches us to get tenants who are responsible and keep them by being a good landlord and make sure you take care of the properties not just collecting the money.

  20. BiggerPockets, can you PLEASE SLOW DOWN! Big distraction, can’t follow your wisdom because you are talking WAY TOO FAST (:

  21. My grandma got married at 14. First child at 15. Had six kids. Never went to high school. Made millions by saving enough to start buying rental properties.
    Some of this is just discipline, hard work, and common sense. Don't really need four boxes to estimate expenses vs. profit.

  22. Shouldn't it be called the 4 rectangle method? Because I'm seeing 4 rectangles, not 4 squares. What is this world turning to?

  23. Four square? Hmmm… sounds like something I learned when I worked selling cars… well, for a minute that is.

  24. Be warned! This video does not discuss factoring in the purchase price! Making it way more complicated than it needs to be. Just google how to calculate real estate CAP RATE. And you can do this whole method much quicker by simply using the 1% rule of thumb. I own multiple rental properties, some cash some mortgaged…and I’ve never calculated my ROI just off what my down payment was. Purchase price needs to be calculated into your ROI.

  25. BTW, does anyone know any tool out there that would basically tell me which property has the highest and quickest potential of being rented not possibly go vacant ever as a rental investment when I plug in location, rent, zip code and and some info about renter I am targeting say single, couples, single family , student etc?

  26. Am really curious about the $860/month mortgage, and how that figures into ROI in this video. At 160k at 5% for 30 years gives $858/month (rounded to 860 here), where from that 858, (in the first month): $666 goes towards interest on the mortgage, and $192 goes towards principal. Shouldn't the mortgage expenses be the interest-only? Principal is essentially paying yourself, so is NOT a cost in my figuring. Is that wrong? As interest reduces over time, its hard to nail down an actual figure which can be applied to all months, but I believe the ROI here is higher than the 9% which was concluded at the end of this calculation, as it considers the entire mortgage payment vs only the interest. Is my reasoning off?

  27. calculation pretty cool …all of it mostly correct … however my two cents comment : he did not make it clear whether the mortgage payment was an ' interest only mortgage ' or a 'traditional mortgage ' ; ( made up of a principal and interest portion )… Rental income is taxable …. the CRA or IRS will expect income taxes on the $4680 CF PLUS the principal mortgage paydown on the mortgage …. ( said another way , "cashflow" is not the same as " net income " )

  28. so 12 years to get your investment back , and after another 8 years , you will have gained a total profit of 8 years worth of rent profits + the value of the property itself
    so you are looking at couple of years of savings to get the mortgage setup and get the house , and then after 20 years you get that 5 times , your investment back
    In the meanwhile you can invest in other things aswell , untill you deplete all the options
    at some point if you get good at it , you can live off this , but this will take years of comitment , saving money and good investments.
    The main thing is , the responsability of owning , and taking care of your investments never stops , there is only one way , forward becoming a job in itself
    whereas you can just get a job , suck at it , or atleast ,be mediocre at it , no pressure , things go wrong change jobs , rent a place ,own a savings account
    that can buy your proverbial bullet and casket , and enjoy life.
    same sh*t , different smell . the real question is this : Do you want to be responsable and own things , or live peacefully and enjoy the little things ?

  29. Where the hell are you getting $2,000 a month rent with a property value of only $200,000? I'm renting a condo right now to a tenant worth $600,000 and I'm only collecting $2,750 per month rent.

  30. This would typically work, but housing prices are far too high now in 2019. I'll be waiting for the next housing crisis to hit, then be ready to jump on foreclosed properties like many investors did after the crash of 2008. Even a small condo in my area would be impossible to make any money from due to the extremely high prices, I don't understand how people do it in this market?

  31. https://www.biggerpockets.com/files/user/brandonatbp/file/analyze-rental-properties—four-square-method-worksheet

  32. .. and it's 0.9,3 think about it for a sec …. that is bs , it's under ,almoust, 1percent but if the stock market makes you 3percent it means this ideea it sucks… because this is 0.9 and the market makes you 3.0 ….

  33. First of all, your video made very good sense throughout the chart.
    I would disagree with 2 points:
    1. I have to be more that lucky to get rent $2000 per month by spending $200000 on a property. Chances are 5%
    2.ROI mentions that you gonna recover money in roughly 10 years depending on the rent we are getting. I wonder thaat $50000 invested today will lose its value to $25000 in 10 years. Best could have been applying index the way banks apply on ROI

  34. Stocks is 8% and recently even higher. At 8% you could put in $5000 into an index add $830 per month. If you start in your 20s and retire at 60 you’d walk away having invested $400k pull out ~$3.5mil. Just something cool to keep in mind 🙂

    why do real estate OR stock? Do both, the strategy above is 0 maintenance, just keep tossing money into the bucket and let it grow. If you hold an index for 25 years your chance of loss goes to 0 percent. And you’d have an additional 15 to keep growing worse case scenario

  35. Finding cities which are making incentives to upgrade older rental property. Anyone know of them are about how to find out?

  36. But brandon we take 400$ on rental, 600$ at most, and cost of buying realestate is about 70k – 100k, in iraq, will i benefit if i do rental realestate ?

  37. This only works if the property is rented! Got ask your self what if? What if after buying both renters move out and it’s 2 years before you can find a renter because someone just built a huge apartment complex with swimming pools cheaper than what you’re charging! So safest is to pay cash for property! 2nd safest is to save up most of the price of the property and the rest get a home equity loan on your house cause you’re debt free! So in this case you save $140,000 + $60,000 from home loan , pay cash for duplex. Finance home mortgage 120 months (10) years. Payments around 600. Put all of the rent received less $200 per month for emergencies. So $1800 a month payed off 60,000 in about 3 years! If renters move out then you simply make your house payment from your job! ! We actually pay off loan as quickly as possible staying debt free except home equity loans that we use buy our next property!

  38. What about a "turn key" duplex with an unfinished attic? Could the attic be finished and then increase the value of the house? Maybe even turn the upstairs rental unit into 3 bedrooms rather than 2.

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