BiggerPockets

Start out checking to see if their market value is correct. In many areas market value is going down monthly. Look for recent solds in that areas. Call a Realtor and discuss values in that area too.

Nice analysis,,,, :idea:

Is it just me or is paying $18/mo not such a bad thing to get $36,100 equity.

Mike please send me your deals that you pass on, ill put that money on my bank and maybe cancel my netflix account while buying myself a nice new bmw.

I don't know of any car dealership that will accept "equity" as payment for a BMW... Until you find a buyer at that retail price (and odds are it won't be an investor), that's just imaginary money. And we all know that selling at so called "full price" is not an easy task these days so you would need to be prepared to hold this for some time.

I know I'm super late to this party - but better late than never.

@MikeOH Care to explain your math - What expenses did I leave out? Also, asking price was 93,000 - At the time you needed 10% down to purchase investment property with conventional financing so your loan amount is incorrect.

@Dwayne Please don't add insult to injury. YES - our tax rate is pretty close to 4% :-)

@Jason If you ever have a question about any deal we post on our site - don't hesitate to call and I can explain how we get to the numbers. We have paperwork on everything.

Hi Mike

Thanks for the quick reply.

There's no doubt mortgage is debt - But the ultimate purpose of the breakdown I provide on the site is to give people an idea what the cashflow might be. Many of the factors you mentioned are valid, but it would be hard for me to estimate since the cost would vary significantly from investor to investor. For instance, many of the investors I have worked with in the past few years, have managed their own properties combined with purchasing a home warranty policy for the big stuff. I agree that a value has to be placed on the time spent by the investor managing the property - but there's no method for that to be estimated with reasonable accuracy - some people value their time more than others. We try to limit capital expenses by purchasing relatively newer construction homes.

So I guess what I'm saying in a nutshell is that the breakdown is supposed to be a starting point upon which investors can build their own figures and estimations for costs. But in our experience with multiple homes, our cashflow estimates have been accurate within 40 dollars or so.