Spreadsheet to Compare Rental Property Investment Options

When Ken and I were looking for houses that might be good options for investment properties, we put together a detailed spreadsheet. The spreadsheet helped us compare the properties, weed out the duds (from a financial perspective), and narrow in on the properties that had higher returns on investment.  

It’s worth noting that we had read quite a few books on the topic of rental properties and real estate investing at this point. (LikeThe Book on Rental Property Investing from Bigger Pockets and What Every Real Estate Investor Needs to Know About Cash Flow).  So that helped us take into account all the different categories of potential expenses there are!  

Spreadsheets we used to compare rental property investment options

Immediate Cash Outlays

With regards to immediate cash outlay / expenses, we factored in:

  • Down payment at 20% of the loan value (and we eventually changed that to 25% after learning that all the lenders we spoke with required 25% down payments for multi-unit investment properties)
  • Closing costs and other closing expenditures at 5% of the loan value
  • Immediate home repairs at 3% of the purchase price

Monthly / Regular Expense Estimating

For expenses that would be related to our monthly and annual cash flow, we factored in:

  • Mortgage at an interest rate of 5% (at that point we hadn’t taken any mortgage pre-approval steps, so we weren’t sure what our interest rate would be).
  • Property Taxes at 2% of the purchase price
  • Insurance at 5.5% of the total monthly rent
  • Vacancy at 5% of the total monthly rent
  • Routine Home Repairs and Other Expenses at 5% of the total monthly rent
  • Capital Expenditures (large home repairs, such as new roof, new driveway, etc.) at 13% of the monthly total rent
  • Property Management fees (since we weren’t looking at any local properties, we’d require a property manager) at 11% of the total monthly rent.

Now, it’s worth reiterating that these percentages are just estimates.  Granted, they are informed estimates based on figures from experienced investment property owners, but they’re still estimates nonetheless.  Once we honed in on a few specific properties, then we requested much more specific expense information. For example, we requested local property tax receipts, called our insurance company for landlord policy estimates for that particular property, etc. But, for the purposes of just identifying good property prospects, those estimates were just fine.

Calculating Cash-on-Cash Return on Investment

To identify the potentially “good” prospects, we used the calculation of Cash-on-Cash Return on  Investment (CoCROI), as well as the “50% Cash Flow” Rule of thumb.

Here’s what our spreadsheet looked like after we had identified about 17 properties. (This is a collapsed view, “hiding” all the individual expense columns in Columns J-R, and just showing the total monthly expenses, including the mortgage payment in Column F, in one summed-up column. We also removed the specific location addresses in Columns A and B for posting on the blog.)

Spreadsheet for Comparing Rental Property Investment Options, includes Cash on Cash ROI calculation

 

But, if you’re interested in seeing the spreadsheet with ALL the individual expenses in Columns J-R, here you go:

The main column we were focusing on was the last column, Column W – Cash on Cash ROI.  We basically eliminated any house with less than a 10% cash-on-cash ROI.  (If you’re interested in reading more about CoCROI, here are some definitions at Investopedia and at Bigger Pockets).

Prioritizing Houses with Higher CoCROI

Around Christmas time, we made some appointments with a realtor to see some of the properties with higher CoCROI figures (focusing on 10% and above). After seeing some of the properties in person, we narrowed down our list even more. We knew that, for our first investment property, we wanted to buy one that didn’t require that much up-front work. Although we’re seasoned home-improvers in our own home, we didn’t want to deal with that on our first investment property. Especially since we weren’t going to be local and couldn’t supervise any major home improvements. Perhaps that meant we wouldn’t get as good of a “deal” on a house that was being sold dirt cheap and needed a ton of work, but, that was fine for us, especially on our first investment property.

The house we decided to put an offer on was listed on the market for $89,900. It was a duplex, with one unit renting for $495, and the other for $595. There was also a detached garage rented separately for $225 / month. The seller had purchased the home about six years earlier for just $25,000, gutted it, and converted it to a duplex. He installed all new plumbing, all new electrical (including separate electrical panels for the units, including the garage), a new roof, and freshened everything up. The finishes are by no means high-end, but it certainly isn’t a high-end neighborhood either.  It was also very close to my dad’s house, which was a big plus! That meant we could easily check on the property when visiting my dad.  

The initial CoCROI for the home was 16.01%  Not too shabby!  That was taking into account a 25% downpayment.  Each lender we spoke to said they required 25% downpayments for all multi-unit investment properties (unless we were planning on living in one of the units. Since we weren’t, that meant a 25% downpayment was unavoidable). Anyway, more on the mortgage process in a future post!

So, for the house we decided to put in an offer on, we took a few steps, many of which I outlined in this post. With some of the information that the seller provided, like the recent property tax bills, and the water, sewer, and refuse bills (which the owner, not the tenant, paid), we were able to firm up some of the expenses on our spreadsheet. We also got pre-qualified for a mortgage at 4.875%, so we factored that in as a more precise figure. The mortgage company also provided their estimates for closing costs, and other fees, like the inspection and appraisal. We also called our insurance company and gave them the home address and answered all their questions about the house, and they were able to give us an estimate on a landlord / homeowner’s insurance policy. That expense was actually much higher than we were anticipating, at nearly $1200 / year. We also added an umbrella policy for extra security.

We were able to lower our property-management expenses by negotiating their fee from 10% to 8% (and they also don’t take a percentage of the garage rent, we decided to manage that on our own since the garage tenant pays in advance for the year for the garage).  

Every expense that we could more precisely estimate made us feel better about the entire process.  

We ended up putting in a lower offer on the house, settling at $81,250. So that also helped with our initial cash outlays as well as our closing costs and monthly payments.

Here’s what our more precise spreadsheet looked like that was only specific to the house we were purchasing.

 

Ultimately, our CoCROI, taking into account all the “firm” expenses we had (but still estimating others) and the final offer price, was 16.44%.  Not too bad!  But, how will that ROI actually turn out after we have a year or two of reality under our belt?  We’ll be sure to share that information!  

P.S., if anyone is interested in the first “comparison” spreadsheet, here is a link to the document on Google Drive. To edit the document, click “File” and select either “Make a Copy” or “Download As.” 

Northern California Trip Report (Series Introduction)


Back in July (yeesh, I can’t believe it was that long ago already), Ken and I traveled to Northern California for a week. One of Ken’s friends from college was getting married to his long-time girlfriend in Oakland, and we were invited! We figured, if we’re going to spend 5 hours on a plane traveling from the east coast to the Bay Area, we may as well make a vacation out of it!  

Northern California Trip Itinerary | Travel | Santa Cruz | Big Sur | Carmel | San Francisco | Muir Woods

It was interesting because Ken and I are not summer travelers. Fall and spring all the way!** I despise heat, crowds, and the more expensive travel rates that come with summer travel. But luckily one of those elements would be avoided – the heat! Northern California weather is gorgeous all year round, so that was a big plus!  

We considered lots of itinerary options, and ultimately decided on two nights in Santa Cruz, two nights in Big Sur (Carmel), and four nights in San Francisco.  

We used a mix of points and paid travel for this trip.

The Flights

Knowing that San Francisco is serviced by JetBlue, I pretty quickly decided that I wanted to try out JetBlue’s Mint class. We booked our flights from DCA to SFO (which included a short connection at JFK).  We opted for one points ticket and one paid ticket. For the points ticket, I transferred points from American Express Membership Rewards. It doesn’t have a great transfer value (250 MR to 200 JetBlue points), but I didn’t have any big plans for Membership Rewards points coming up, so just transferred some anyway.  For the paid ticket, we spent $617 (which included both segments, DCA-JFK-SFO), which I thought was an excellent price for lay flat seats on a five hour flight.  

The return flights were a little trickier. I try my hardest to avoid connections when returning from a vacation. But decent seats (read: lay flat) on a nonstop from SFO to any DC area airport was a tough find. Ultimately, I found one daily United flight that was a nonstop from SFO to Washington Dulles on a 777 with lay flat seats! And lo and behold, it had points options available.  It was a three-cabin aircraft, but we just opted for business class seats.  Boom.  100,000 miles (there was no saver availability) and $11.20 for two tickets.

 

The Hotels

I tried multiple VRBO and AirBnB options for this trip, but didn’t have any luck, as I lamented in this post.  So, we would have to stick to hotels.

Points redemption / chain hotel options in Santa Cruz close to the beach were extremely limited, so we stayed at a B&B called the West Cliff Inn in Santa Cruz. It was actually the first B&B we’ve ever stayed at, and it was fantastic.  So, we paid out of pocket for this hotel, but were able to use some Barclay Arrival Card points to recoup some of the costs in the form of a credit card statement credit.

In Big Sur, i was able to score two free nights in an Ocean View King with Balcony at the Hyatt Highlands Inn Carmel. The nights were 25,000 Hyatt points each. That same room was going for more than $600 / night, so that was a great redemption value!  Plus, they didn’t charge a resort fee.  

After exploring multiple points options hotels in San Francisco (like the Hyatt Regency, and even considering a Fairmont credit card application to get two free nights at the Fairmont in SF), the hotel photos and locations just kind of left me like, meh.  So, we opted for another non-chain hotel for the San Francisco portion of our trip: The Scarlet Huntington. This was also another really fantastic hotel.

 

The Rental Car

The rental car was definitely a splurge. After enjoying our convertible we had rented a few years earlier in the Florida Keys, we decided to rent one for our Northern California trip too!  We’d pick it up at the airport, use it for our drive along the Pacific Coast highway in Santa Cruz and Big Sur, and then return it at a San Francisco city location since we wouldn’t need a car once we got to the San Francisco portion of our trip. That worked out beautifully, and in fact, the in-city rental car return location was very close to the Scarlet Huntington Hotel.  

 

What this trip report series will include

I’ll review all the hotels, as well as Jet Blue’s Mint Class and United’s 777 nonstop business class service from SFO-IAD. I’ll also post LOTS of pictures of our pacific coast highway drive, and our sightsee-till-we-dropped activities in San Francisco.

 

**Interestingly, this was the second year in a row though that we had summer travel plans. The previous year was our Alaska cruise!  Although summer is pretty much the only time to travel to Alaska on a cruise!

Review of Mardi Gras Grandstands Options


I had been putting off writing a “review” of Mardi Gras grandstand options for a while. Mostly because I did a pretty terrible job of photographing the actual grandstands and locations. Go me. But, I figured others may find information helpful, especially because when I was researching grandstand options, I couldn’t find much information. And anyway, we have plenty of pictures that we took FROM the grandstand locations, and I figure that’s what is most important anyway, right? The view?

Mardi Gras Parade Seating in Grandstands | New Orleans Travel

I covered in this post why we were interested in getting grandstand tickets for some of the parades. But, in case you don’t feel like clicking, here’s the excerpt:

  1. Well, first and foremost, we love taking photographs. So, I wanted to make sure we had a decent vantage point for taking pictures of all the parades! 
  2. I don’t like the idea of having to arrive at a parade route 4+ hours in advance to save a good spot. I’d rather use that time to see other sites in New Orleans! Having tickets for a dedicated spot will allow us to arrive pretty much whenever before a parade starts and have a good viewing location!
  3. I like the idea of having a place to sit if our legs get tired as the parade route passes. (I’ve found that some viewing stands are bleacher-like seats, while others are just platforms with no seating. I’ve been making sure to book the ones with bleacher seats! Even if people stand on the bleachers as the parade starts, we can still grab a seat.)
  4. Although the grandstands will be filled with people, I figure it will be LESS crowded than the streets and sidewalks, and that we won’t constantly be getting bumped into or anything. That’s just not my cuppa tea.I figure, if the parades really are THAT much more awesome in the midst of the crowds on the sidewalk, we can just cut our losses on the price we paid for the viewing stands and head down to the sidewalk.

Because we weren’t sure if any of the grandstands would be particularly better than the others, we decided to spread the love among the different options.

  • For the Endymion Parade, we chose the “Place St. Charles” zone for $40 each
  • For the Bacchus Parade, we chose the “Lafayette Hotel” zone for $40 each.
  • For the Zulu and Rex parades, we chose the Hotel Intercontinental Grandstands $75 each.

Not cheap, I realize, but because of the reasons I outlined above, it was money well spent for us.

So, how did we like the grandstands? They were great! One of the common complaints about the grandstands that we had read online was that people felt too far from the action or not like you were a part of the parade. I can say that is definitely not the case! And for what it’s worth, we also watched plenty of parades from the sidewalks when we didn’t have grandstand tickets (like the Krewe of Iris, Krewe of Tucks, and others). However, we just kind of happened-upon those parades. We didn’t stake out spots or watch them for hours on end. We did end up getting closer than what I thought we would though without grandstand seats.

It’s also worth noting that sometimes these parades were VERY VERY LONG. The Bacchus parade kept getting “stuck” and there were very long waits in between each float. So, it was nice to have a spot in the grandstands to sit while waiting for the next float to come!

For those interested, here are some of the various views from the grandstand areas!

“Place St. Charles” Mardi Gras Grandstands

It was night time, so please forgive how dark the photos are! But here are the Place St. Charles grandstands before the start of Endymion:

Place St. Charles grandstands during Mardi Gras | Krewe of Endymion Place St. Charles grandstands during Mardi Gras parade

The grandstands were not very high, so there weren’t that many people behind us, and although the grandstands were full, it didn’t feel overly crowded (as you can tell by looking behind us in this selfie). (For what it’s worth, the Lafayette Hotel grandstands the next night were much emptier).

Ken and I at Place St. Charles grandstands

In fact, some of the “best” photos I got of the Place St. Charles grandstands were actually taken from across the street the next day as we were walking to a different grandstand section! They’re the white boxed-in grandstands across the street:

Place St. Charles grandstands Place St. Charles grandstands

We were in the second row of the grandstands, and we still had a great view!

Krewe of Endymion from Place St. Charles grandstands Krewe of Endymion from Place St. Charles reserved seating

In fact, when people did “get in the way” of my photos, I feel like it conveyed how fun and festive the atmosphere was!

Krewe of Endymion from Place St. Charles reserved seating

For what it’s worth, the Krewe of Endymion approached from the LEFT of our grandstands at Place St. Charles.

“Lafayette Hotel” grandstands during Krewe of Bacchus

For this parade, I didn’t take a single photo of our actual grandstands. I’d say that I liked this location LESS than the Place St. Charles grandstands, although they were still just fine. My main complaint is that there’s a lot of excess light from the nearby buildings, which kind of “takes away” from the fun lights on the floats.

For example, whatever that building is here with the columns was a bit too bright and kept affecting my photo exposures:

View from Lafayette hotel grandstands | Mardi Gras View from Lafayette hotel reserved seating | Mardi Gras View from Lafayette hotel grandstands | Mardi Gras

However, there were more grandstands in this area (Lafayette Hotel) than there were in the Place St. Charles grandstands, so it felt a little less cramped. There was also more space between the first grandstand row and the metal street barriers, meaning there was more room for people to go and take turns to stand in front of the grandstands. We We lucked out with fairly empty grandstands at this location, although that might have been because it was very cold, and that the Bacchus parade was taking FOREVER to pass because it kept getting “stuck.” So there were long delays in between almost every float and a lot of people started to leave.

We got some great photos of the parade though!

Krewe of Bacchus from Lafayette Hotel grandstands during Mardi Gras Krewe of Bacchus from Lafayette Hotel grandstands during Mardi Gras

Oh, and in case you’re interested in the “St. Charles Reserve A” grandstands, those were right across the street (parade route) from the Lafayette Hotel grandstands, so we got some pictures of the St. Charles Reserve A grandstands:

St. Charles Reserve A grandstands during Mardi Gras St. Charles Reserve A grandstands during Mardi Gras

As you can see, those ones weren’t very crowded either. But again, not sure if that’s because it was so cold.

One upside of this area though was that we could hear the parade emcee. They must broadcast from that area. We didn’t even know there was a parade emcee the night before when we were in the other grandstands!

Intercontinental Hotel Grandstands during Mardi Gras

Again, keeping with my theme of completely forgetting to take photos of the actual grandstands, here is my best photo I have of the Hotel Intercontinental Grandstands:

Hotel Intercontinental Grandstands during Mardi Gras

As you can probably tell, it is more crowded than the Lafayette Hotel grandstands, and they had higher grandstands too. But the REAL upside of these grandstands was having access to clean bathrooms inside the hotel and having a place to go to warm up after being outside during the cold weather and not having to worry about losing a good spot! (Hotels are completely closed to non-guests during Mardi Gras. But since we had grandstand tickets, we were given wristbands to enter the Intercontinental. There are porta-potties available for other parade goers). We also ate lunch at the Intercontinental in between the Zulu and Rex parades. That was a nice option too since so many restaurants are closed on Mardi Gras (it’s essentially a holiday in New Orleans).

We were a few rows up, but people frequently transitioned in and out of the front “standing room” only area, so we were able to go down for some front row photos pretty often. We still had a great view!

Krewe of Zulu from grandstands Krewe of Rex Krewe of Rex

So, there you have it! Three Mardi Gras options tried and tested! Have you been to Mardi Gras? Did you opt for any grandstands? What did you think?

Mardi Gras Parade Seating in Grandstands | New Orleans Travel

Our Experience Shipping Luggage Ahead


As you can probably tell from the first several posts in our Alaska Cruise trip report, we took quite a roundabout way to Seattle!  To recap:

Why did we ship our luggage? 

As I’ve mentioned before, I have completely given up on carry-on only packing for long trips. I pack lots of camera equipment (including a tripod), and a lot of international airlines go by WEIGHT of carry-on bags instead of dimensions. So, although I can generally FIT all my items into carry-on bags, it always exceeds the airline’s allowable weight for a carry-on bag. Plus, for a cruise, I generally pack a bigger selection of clothes compared to other trips. Dressy clothes for dinner, casual clothes for the ship, and for this Alaska cruise, cold weather clothes and things like hiking boots. So, a checked back was definitely a necessity for us.

But yikes, the idea of lugging a big suitcase on all those different modes of transportation was kind of daunting. Plus, having to pick up our bag at LaGuardia then re-check it at JFK seemed unnecessarily time consuming.  So, we did something that we’ve never done before for a trip!  We shipped most of our luggage!

Looking for an easier way to pack and avoid lugging your suitcases to and from the airport? This was our experience shipping our luggage!

We briefly considered luggage shipping services like Luggage Free and Luggage Forward, but those companies just seemed like an unnecessary middleman, adding lots of cost without much additional service. So, I measured the suitcase we would normally use as checked luggage, and entered the dimensions into FedEx’s and UPS’s website, estimating about 50 pounds for our suitcase.  I also sent a quick email to our hotel in Seattle, the Grand Hyatt, to make sure that they would accept a suitcase FedEx delivery. They responded promptly that they could certainly accept the FedEx’ed suitcase. *   

The process for shipping our suitcase (and packing the bag)

The estimated price for FedEx’ing our suitcase would be about $60.00.  Considering we would’ve had to pay $35 to check our bag on our DCA-LGA flight (since we weren’t flying first class or anything on that leg), it seemed well worth an extra $25 to avoid the hassle of lugging our suitcase in and out of planes, trains, and automobiles.  We also signed up for a FedEx account, which was totally free, and that gave us an additional discount on the shipping. The only downside was that the cheapest option was FedEx ground, and that was a five-day transit time from our home to Seattle. Since we’d want to build in a little “cushion” to account for transit delays, that means we’d have to ship our suitcases a full week in advance. I don’t know about you, but, despite multitudes of detailed packing lists, I often think of so many things to pack at the LAST POSSIBLE MINUTE. Or, similarly, needing to rearrange items between checked bags and carry-on bags thanks to space or weight considerations. But, with no LAST POSSIBLE MINUTE available if we shipped our big bag far in advance, we’d have to plan our suitcase packing very methodically!  

Luckily, our planning went smoothly. We packed everything that we wouldn’t need for the first few days of our trip in the shipped suitcase. Those included things like our tripod, hiking boots, swimsuits, dress shoes, cold-weather items like long pants and sweaters, (Vancouver and Seattle would be quite warm .. the Alaska portion however was forecasted to be much colder, even in June), and frankly, the vast majority of our clothes we’d need for the trip.

We shipped our bag a week prior to our departure. I was a little nervous about how FedEx would label a suitcase (compared to like a box). I feared that their normal sticker labels would fall off the suitcase material.  But they actually have special luggage tags, not that different than what you’d get at the airport. (Just a quite a bit larger).  Those shipping labels attached to the suitcase handles.

For the next several days, I obsessively checked FedEx’s website for updated tracking information. Once I saw that the bag was delivered to our hotel in Seattle (which was actually the day we were departing JFK for Vancouver), I called the hotel to confirm receipt of the luggage. They had it, and I also confirmed my reservation and arrival date.

Once we arrived at the Grand Hyatt, we checked in, and the reception staff told us that they would get the suitcase out of storage and have it sent up to our room. That part actually took quite a while! We waited for more than 40 minutes for our suitcase to get delivered, despite one or two calls to the front desk to make sure they didn’t forget about us. At that point I was starting to get worried that our suitcase had been misplaced at the hotel.  

But, not to worry, our suitcase finally arrived in our room. We took a quick glance inside and everything looked in order.  And that was it! Now the only transporting of that suitcase we’d be responsible for is getting it from the hotel to the ship check-in!  Much easier than lugging it around on all those transportation modes!

Anyway, we’d definitely call the luggage shipping experiment a success and we’d definitely try it again for future trips. One thing I might try in the future though is packing a duffel bag instead of a suitcase. Even though we have lightweight luggage, the suitcase alone is still about 11 pounds. Since most of the shipping cost is based on weight, we could’ve saved a decent amount by shipping something that was 11 pounds lighter!  But, of course that sets up the potential for damage to the items or the bag ripping.  Pros and cons to both options I suppose.  

Have any readers ever shipped luggage ahead?  How did it work out for you?  

* We did consider shipping services directly to the cruise port also. However, I really wanted to make sure that my bag was IN MY POSSESSION prior to boarding the ship. I wanted to be able to shop for last minute items in case my bag got lost or didn’t arrive as planned.

 

Looking for an easier way to pack and avoid lugging your suitcases to and from the airport? This was our experience shipping our luggage!

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