Do you like the idea of investing in multifamily properties?

If so,  that tells me that you want stable cashflow that gives you enough income to replace the income you’re earning in your day job.  – Tweet   Or you just want really good cashflow!

That also means you have to get really good at analyzing deals.

In fact, you have to learn to determine whether a property is a good fit for your goals really quickly. Some people aren’t great at that. I’ll share a little secret with you. When I was first starting out in real estate investing, I took far too long to determine if a deal was good or not. By the time I had decided to move forward, the deal was gone.

Over-analyzing is a deal killer!

If you take too long to run the numbers and look at every little thing in a property or deal, chances are that by the time you decide to jump, the deal will be gone (and you’ve wasted a whole lot of time).

I don’t want that to happen to you. So, let me give you a quick way to look at a property to see if it’s worth your time and effort. It takes literally minutes, but you have to see the rent roll.

In this article I will teach you what I do!

If you want to learn right now without reading another word of this article, click on the video below:

How to use my 1.5% Rule…

Would you like to do more deals faster… instead of investing in just one or two properties a year? That means you can’t spend a whole bunch of time analyzing the deal. You have to get through that part quickly. Decide if it’s a yes (and you then make your offer and move through due diligence) or a no (and you move on to the next property).

Analyzing a property entails looking at the gross scheduled income, the rents, the expenses, how much money you will deduct for debt service and maybe repairs. If you take too long you’ll be sorry. After all of that analyzing you may decide it’s a yes and you’re ready to pull the trigger. You’ve decided to do the deal. But since you took too long, that’s when your broker will inform you the property is already in escrow or is gone. Another investor moved faster. He/she saw the property in all its glory while you sat at your desk pondering.

There’s a much easier and faster way to determine if a property is right for you. I call it the 1.5% Rule.  – Tweet  

Simply, this is a great, fast formula for those who are most interested in earning cashflow. Let me give you an example…

Let’s say you find a property that is worth $1M. All you have to do is multiply it by 1.5%, which means you should receive $15K per month in gross scheduled income.

As long as that property you are looking at is showing that it brings in that $15K per month in gross scheduled income.

If the property you are looking at isn’t earning that amount, you don’t want it because it won’t get you to your goals.  – Tweet  

Now let’s say the property shows that it earns $20K per month in gross scheduled income. GREAT! You need to move super-fast on closing that deal.

If you are more conservative, you may want to use a 2% Rule, so your baseline dictates that that $1M property can show that it brings $20K per month in gross scheduled income.

If you are more of a risk-taker, you may use a 1% Rule, which means the $1M property is currently generating just $10K per month in gross scheduled income.

At the end of the day you need to decide if you are more of a conservative investor or one who is willing to take a bit more risk… or if you’re like me and land somewhere in the middle.

The next thing you’ll need to learn about has to do with operating expenses and finance expenses. Understanding these expenses and the differences between them will help you bump up the cashflow in your properties.  – Tweet   That’s what you’ll read about next week.

For now, I’ll leave you with a question:

Now that you know more about the 1.5% Rule, how are you going to use this rule to get more deals?

If you need more guidance, be sure to friend and follow me on all my social media pages. Get some conversations started! I promise that it’s me answering your questions. Here’s a quick link to my Facebook page:

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You can also check out my latest podcasts and collaborations here keeponcashflow.com/podcasts/