For a quick analyzation of a property, is this right?

[Jim Growfer]

I've been using this as a filter to see if a property is worth looking into further.  Is this accurate?

I look at the Gross Income and then do 50% of that to = NOI

I look at the purchase price and do 7% interest to figure out my Debt

and then I subtract.

Example: $2million purchase price

300k Gross income

150k NOI

140k Debt

= 10k Cash Returns a year

[Tyler Kastelberg]

@Jim Growfer

I applaud you for creating a quick heuristic to evaluate a deal. My gut tells me that you'll eliminate a number of possible good opportunities using this method.

Alternative: Investors with expertise in certain markets can quickly determine whether or not a property is worth pursuing based on its price per 1 bed unit, 2 bed unit, etc. 

For example, I know that I can make a deal work in my favorite neighborhoods of Norfolk, VA at $60k per 2 bedroom unit. If the property has 10, 2 bedroom units and its asking price is less than $600k, it is most likely worth pursuing diligence.