Clarification on basic material from the BP book Rental Property
Hi, My name is Chris and I'm just getting started, currently reading the BP book Rental Property Investing. I look forward to my new educational journey, it's very exciting!
Already however I'm caught on some basic math which is kind of glossed over. If anyone can kindly break this down into more detail I would greatly appreciate it!
Chapter 3: Four Sample Plans. Under Buying Your First Property p54. The Year One math makes no sense to me.
- $63.5k loan. I guess he's tacking on $500 just to account for any irregularities?
- $110k value after year one.
- Cash flow from the rent is $9600 (4 units at $200/ea per month).
Got that mostly.
- Total equity $46,500. Huh?
- Total net worth $56,500. Huh?
These last two I really don't get. Thank you for any help!
And how do you buy a $100k property for 80k anyway? Maybe that is covered later.