The Pro Forma and Analyzing a Deal with Adam Whitmire

ROI Wealth Watch

In previous episodes, Jared and Tom shared valuable tips and strategies on how to find the best deals as well as how to find the best deals relative within today’s market conditions. But, what happens once you do get a deal? How do you know if that deal will give you a great return of investment?

In this episode, Jared and Tom compare buying properties in different neighborhoods, discuss the numbers involved, and find out which is the better investment. They highlight the use of the Pro Forma and why the numbers indicated aren’t absolute. They also talk with Adam Whitmire, a friend and colleague who specializes in analyzing and crunching numbers. He’s here to explain the different terms investors should familiarize themselves with when it comes to analyzing deals.

“Some properties look good on paper, but don’t perform so well.” – Adam Whitmire

In This Episode of ROI Wealth Watch:

• What is the difference between buying a property in a C+ and A- neighborhood?
• The numbers you should look for in a pro forma and why are they important?
• What should you consider when you go from an A class property to a C class property?
• What does it mean to be logically attached?
• Why do we look for cost per square foot?
• Why we should understand Total Return of Investment
• The three different types of leverage.
• The type of numbers banks like to see.
• What is an Expense Ratio?
• When is a CAPEX reserve important?
• How do you calculate estimated cash flow?

Wealth Watch Words of Wisdom:

1. Pay attention to your assumptions. Don't make the same assumptions for a C-class asset that you would for an A-class asset.
2. Aim for numbers that are slightly higher than your target.
3. Don't get emotionally attached to the property or logically attached just to the numbers.

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Help Others Buy Real Estate in the Right Markets at the Right Times!

Thanks for tuning into today’s episode of the ROI Wealth Watch podcast with Jared Garfield - your resource for learning to buy real estate in the right markets at the right times. If you enjoyed this episode, head over to iTunes to leave us a rating and review. Subscribe to the show so you never miss an episode, and visit our website to grab your free gifts!

And, if you’re looking for the best turnkey rental properties to invest and renovate to maximize your real estate portfolio, visit the Rich Life Real Estate website to view turnkey rental opportunities or speak with an investment advisor for more information.