Today’s REI Classroom Lesson

Patrick Donohoe explains how to track how a property is doing financially, especially over time.

REI Classroom Summary

There’s software that helps track the property over time, including ROI. It’s important to look at each property from a logical, financial sense instead of an emotional sense.

Listen to this REI Classroom Lesson

Real Estate Investing Classroom Show Transcripts:

Mike: Welcome back to the flipnerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.

Patrick: Hey, everyone, Patrick Donoghue here from paradigmlife.net, and I’m going to give you guys, the REI Classroom, a little tip today on what I call, keeping score.
Mike: This REI Classroom real estate lesson is sponsored by FlipNerd Investor Coaching, your blueprint to investing success.
Patrick: So keeping score is basically understanding what’s going on with your finances from a logical perspective. So being a financial adviser, and basically strategizing and consulting with people on what to do with their money, it’s really important to track, not from an emotional standpoint, but from a logical standpoint. That’s why I really see it with real estate investors, especially those that have had properties for a while. There’s this emotional connection that comes with things, whether it’s a car, whether it’s a toy for children, I mean there’s so many different examples there.

But really, the emotional side of things, you have to be cautious of it, especially when it comes to a rental property. Because if you want to buy a property for a rental property, an investment property really for the financial benefits, not the emotional benefits. Now, if you’re going to go that route, that’s totally fine, but typically, investors don’t get into properties to lose money. They get into it actually to make money.
So the understanding of a proforma, and also I would say objective software, not necessarily an Excel spreadsheet, but an objective software is going to help you really understand what you’re buying if you’re getting into a property, how to analyze it and so forth. But it’s also going to help you track it over time. There’s a good friend of mine, Jason Hartman, that I know has been on this classroom before, and he talks about the One-Percent Rule. That’s a good benchmark to understand when it comes to rental value.

So if you have a $100,000 property, $1,000 a month gross rent, that’s really kind of a benchmark. Once you start to have a property that goes up in value, let’s say it goes to $200,000, but it’s still renting for a thousand, that’s really a time where the rate of return is no longer desirable, based on the value of the property. That’s a good signal to be able to sell 1031 exchange into two properties, three properties, they have those types of measurements.
So there are a few software programs that I’ve seen out there. They’re a dime a dozen, but the ones that I’ve seen are Property Tracker, also Quicken, which is owned by Intuit which is the biggest financial software or accounting software out there these days. They have a rental property tracker now. So Quicken has one. I’ve heard it’s pretty good. I’ve never used it. Also you can resort to the traditional bookkeeper, the guy that’s going to charge you 100 bucks a month, but he’s going to reconcile, he’s going to balance everything, he’s going to keep it all organized, and really help you understand where your initial investment is, and whether you should keep it there or not.
Okay, make sure you measure, make sure you have all of your ducks in a row when it comes to the metrics associated with your money because that’s what’s going to help you build wealth and get ahead. That’s it for today. If you want to learn more about my company, my website is www.paradigmlife.net.
Mike: The FlipNerd Investor Coaching program is America’s most robust real estate investor training and designed for your success. If you’re ready to roll up your sleeves, ready to take personal responsibility for your own success, and ready to dive into a world class instructional coaching program that provides you step by step instructions to help you achieve financial freedom, you need to visit flipnerd.com/coaching to learn more. Spaces are limited. Whether your goal is simply to get started or to take your business to the next level, you may be a fit for our life changing program. Learn more today at flipnerd.com/coaching.

Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of flipnerd.com or any of its partners, advertisers, or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
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Patrick Donohoe
Patrick H. Donohoe RFC, IAR ...is a business person, entrepreneur, investor, and podcast host. Patrick is the President and CEO of Paradigm Life, a private financial service, consulting and education company which provides its services to individuals, businesses, and investors. Paradigm Life started in 2007. Patrick is the host of The Wealth Standard Radio, which has been broadcasting since 2007 and continues to airs live weekly. Patrick is the co-creator of The Cash Flow Wealth Summit - a virtual financial conference. In its inaugural launch, the conference had 33 presenters speaking on 12 different topics which ended up attracting over 5900 attendees from more than 30 countries. Patrick is also the President of PL Wealth Advisors, LLC a Registered Investment Advisory. Personally - Patrick grew up in West Hartford, Connecticut and moved to Salt Lake City, Utah in 2003 to attend the University of Utah and subsequently graduated with a BA in Economics. He currently resides in Salt Lake City, Utah, with his wife of 13 years and their three children.
Patrick Donohoe

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