Want to know how to use your real estate ROI calculator to increase your passive cash flow? This episode of the JWB Not Your Average Investor Show is a must-see!
Just when we thought the rental property asset class couldn’t get any more attractive to potential investors, Gregg Cohen went and found a remarkable thing that is happening for new investors:
Some of our investors are finding themselves with almost double the cash flow and 50% higher ROIs!
On this week’s show, we discussed:
- A case study where a JWB investor was able to earn $261 more in positive cash flow and 5% more expected ROI than what was on his original property evaluation
- How to accomplish this and why case studies like this are common for JWB investors
- How to know when opportunities like these are inflated claims or a real opportunity
For our case study, the property we analyzed is 8529 Cheryl Ann Lane, Jacksonville, FL 32244. Here are the quick stats:
- Expected avg rent: $1,275
- Actual avg rent: $1,536
- Add’l Rent Increase: $261
- Add’l Rent Increase %: 20%
What Numbers Should Be Included In A Real Estate ROI Calculator?
Rental property investing is a journey. You start with a lot of numbers and figure out what is worth investing in. Closing costs, cash flow, tenant fees, escrow, taxes, etc. are all part of the numbers.
You have to get to the milestone where you know all of the numbers for a regular investor. There are many turnkey rental properties out there, but not all help show full transparency with numbers.
There is another milestone: understanding how you can take the initial evaluation and maximize your investment return. What is the razor’s edge of success with those numbers before you go positive or negative in your cash flow? If you work with a turnkey rental property group, they could be overly optimistic with those numbers to show higher returns.
Today, Gregg wants to share some info with you to see exactly what the numbers should be. He will show the profit potential when looking at all five profit centers.
Where Do People Fudge The Numbers To Show Positive Passive Cash Flow?
- Rents — That rental income is a huge driver of cash flow. If they get too aggressive on fudging those numbers, that could wreck your ROI expectations.
- Maintenance and Vacancy Fees — Not many property management companies have the volume to track those numbers, nor the data system to dial in those numbers. You can use industry standards, but they are not as accurate.
- Tenant Placement Fees — Not all turnkey PM companies have long-term leases, and they raise tenant placement fees more frequently than JWB. JWB costs investors fewer tenant placement fees because we believe in long-term leases of 2- to 3-years.
What Is The Real Estate Roi Calculator Showing For This Case Study?
We looked at the house of our case study on Cheryl Ann Lane in Jacksonville. It’s a new house that had not been built yet at the time of purchase.
What Happens When You Buy With Cash, Non-recourse Financing, Or Traditional Financing?
If you compare the three types of purchases, you’ll see the returns for a cash purchase has the highest monthly cash flow. A non-recourse loan calculator shows the least profitable real estate ROI. Conventional financing may have a lower monthly cash flow but a higher total return on investment.
Either way, these three purchase methods bring a passive income stream to the real estate investor.
What Does The Real Estate ROI Calculator Show For A Cash Purchase?
This client decided to purchase with cash to maximize the monthly cash flow. The 5.2% returns are great, and the home price appreciation is averaging at 4.3% each year.
The next thing that happened with this property is that the RENT went UP! This investor made an extra $261 per month as a result.
When you have the opportunity to OVERPERFORM for a real estate investor, that feels great, and JWB loves to provide extra ROI whenever possible. The cash flow and the tenant placement fee went up, too, for an additional 1.2% ROI.
How Does A Cash Purchase Versus A Finance Purchase Affect Passive Cash Flow?
Cash purposes are more conservative than a finance purchase. Also, when you buy with cash, your closing costs are lower.
When you finance, you leverage your investment. You are using smart debt to mitigate risk, and your returns can go high, too. Gregg showed how the same purchase makes the ROI go even higher!
Risk mitigation is using your investment and getting higher returns because you’ve leveraged your money, and you’re making more money on a smaller investment. Your cash flow profit center skyrockets when you add it all up!
This is all contained inside those five profit centers, and those are the numbers that JWB uses to help investors decide to purchase.
Smart debt is an asset that pays for itself, is inexpensive debt, and goes up in value over a complete market cycle of 10 – 20 years. This is why Gregg loves smart debt so much. That’s what we see with these numbers here.
What About Repair Costs And Appliance Costs?
We look at our maintenance costs constantly, and we adjust our numbers accordingly. In short, JWB’s numbers accurately include repair and maintenance costs.
How Do The Passive Cash Flow Numbers Change With Home Appreciation?
With no appreciation factored in, the real estate ROI calculator shows good returns. But, when you factor in the appreciation over a full ten- to twenty-year real estate market cycle, the real estate return on investment is fantastic!
What Are The Five Profit Centers That Factor Into A Real Estate ROI Calculator Contributing To Your Passive Cash Flow?
- Home Appreciation
- Positive Cash Flow
- Tax Savings
- Principal Paydown
- Inflation Hedging
Regarding all five profit centers, JWB is very conservative. That is why we often under-promise and over-deliver, making for a more considerable ROI for our turnkey rental property investment clients.
We build so many homes, and we have so many data points. JWB’s numbers are the most accurate of any turnkey rental property management in the United States. That is why so many real estate investors who work with JWB say, “In JWB, we trust.”
What Is Another Benefit To Working With JWB As A Turnkey Rental Property Manager?
When you purchase five properties from JWB, you get a lower property management fee from 10% to 9%, and when you get to 10 properties you buy from JWB, your monthly management fee drops to 8%.
When you invest in more real estate properties with JWB, your ROI gets even better because we lower our monthly property management fee by one percent after five properties, which increases your passive cash flow every month! It doesn’t get any better than that for Jacksonville real estate rental property investors!
How Do I Find Out More About Investing With JWB?
Contact the JWB team to begin the discussion. If you want to invest in Jacksonville real estate, now is a great time to jump in. Go to www.ChatWithJWB.com and find out how we can help you reach your financial goals.
If you want to become part of the JWB online community, join us in the JWB Facebook Group at https://www.facebook.com/CashFlowProperties.
You can also go to www.JWBInventory.com to see what properties are currently available. We encourage you to contact the JWB team for a consultation to determine how our turnkey rental properties can deliver positive passive cash flow.
We hope you enjoyed learning how important the numbers are when looking at a thorough real estate ROI calculator to earn money. The Jacksonville real estate market continues to grow and JWB is excited to help many investors from around the United States create passive cash flow from the hard asset class of single-family home rentals.
To Your Success,
Gregg Cohen
