You can’t juke the operating expenses

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There’s another broker with whom I’m acquainted who always seems to have amazing deals to show her clients.

Every week or so, I see her pitching deals with 8-10% cash on cash returns.

Eventually, I started to get curious. After all, this is a tough market. I have every advantage in the world, and it’s not easy for me to produce 10% cash-on-cash. How was this woman doing it for capital-constrained clients?

Do you know how she finds these deals?

She takes the same listings we use and runs a financial model that does not include operating expenses besides property tax and insurance. So, for example, there is no estimate of the water / sewer bill, pest control, repairs and maintenance, etc.

Of course this makes the numbers look great.

But she is going to have some very surprised owners in the months and years to come!

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