UNDERWRITING SELLER FINANCING DEAL WITH MICHEL BLANK CALCULATOR

6 Replies

Is it possible to underwrite seller financing deals in Michael Blank calculator?

I need help on a seller financing deal offer I am putting together. It's a 12 unit apartment building. Each unit is $700 rent, insurance is $50 per unit monthly ($7200 annually), property tax is $4815 annually, capex is $250 per unit annually, vacancy is 5%, operating expenses should be 50% of effective gross rent , I want to cash flow at least $100 per unit monthly. Upfront rehab cost is $66k. Let's assume I'm paying the $66k rehab cost out of my pocket for scenario 1. Let's assume I raised the $66k rehab cost from investors in scenario 2. We want to do all the rehab in first 12 months. We are looking to push rent to $825 per month per unit. We want to raise rent in first 12 months. We want to do 0% interest and 0 money down. The offer price is $1.2M

QUESTIONS:

1.How do I calculate how much I pay seller every month in year 1 when rent is still $700? Remember I want to cashflow $100 per unit monthly myself

2. How do I calculate how much I pay seller every month in year 2 and years after when rent is pushed up to $825?

3.Remember I want to cashflow $100 per unit monthly myselfHow do I calculate when (what year) we should pay the balloon payment for the remaining balance? How long should the loan be for?

4. how do I calculate when I should be paying investors back if I raised the $66k rehab cost? how much is their return for letting me borrow rehab cost money ? 

5. is there closing costs associated with seller financing? how much is it in seller financing? does the buyer or seller pay closing cost in seller financing deals? is it included in our calculation?if it is not possible to underwrite seller financing deals with Michael Blank calculator, do you have an excel worksheet that you can share that I can use to underwrite seller financing deals and make sense of this?

6. how can I make this deal a win win for the seller as well?

1. Calculating payments: PMT = NOI/12 - $1200 (expected cashflow). E.g., If your NOI is $60K, then the payment is $60,000/12 - $1200 = $3800

2. Same as #1 but for different NOI. Why though? Keep it simple - go for the fixed payments regardless of NOI.

3. Depends on the seller. At 0% interest, I would look for a fully amortized loan over 26 years ($3800/mo) :-)

4. Depends on your investor's demands. Maybe 10% simple interest or 80% of profits or anything else.

5. Use typical closing costs for a cash transaction: title insurance, recording fees, inspection, whatever else is customary in that city/state.

6. If the seller is OK with the price and terms and that benefits you as well, it's a win-win

Originally posted by @Nick B. :

1. Calculating payments: PMT = NOI/12 - $1200 (expected cashflow). E.g., If your NOI is $60K, then the payment is $60,000/12 - $1200 = $3800

2. Same as #1 but for different NOI. Why though? Keep it simple - go for the fixed payments regardless of NOI.

3. Depends on the seller. At 0% interest, I would look for a fully amortized loan over 26 years ($3800/mo) :-)

4. Depends on your investor's demands. Maybe 10% simple interest or 80% of profits or anything else.

5. Use typical closing costs for a cash transaction: title insurance, recording fees, inspection, whatever else is customary in that city/state.

6. If the seller is OK with the price and terms and that benefits you as well, it's a win-win

 Thank you so much . I'll put in excel

Originally posted by @Nick B. :

1. Calculating payments: PMT = NOI/12 - $1200 (expected cashflow). E.g., If your NOI is $60K, then the payment is $60,000/12 - $1200 = $3800

2. Same as #1 but for different NOI. Why though? Keep it simple - go for the fixed payments regardless of NOI.

3. Depends on the seller. At 0% interest, I would look for a fully amortized loan over 26 years ($3800/mo) :-)

4. Depends on your investor's demands. Maybe 10% simple interest or 80% of profits or anything else.

5. Use typical closing costs for a cash transaction: title insurance, recording fees, inspection, whatever else is customary in that city/state.

6. If the seller is OK with the price and terms and that benefits you as well, it's a win-win

Hey Nick, can you tell me if idid the seller financing underwriting correctly? Please see video below:

https://www.loom.com/share/74d... 

Originally posted by @Nick B. :

1. Calculating payments: PMT = NOI/12 - $1200 (expected cashflow). E.g., If your NOI is $60K, then the payment is $60,000/12 - $1200 = $3800

2. Same as #1 but for different NOI. Why though? Keep it simple - go for the fixed payments regardless of NOI.

3. Depends on the seller. At 0% interest, I would look for a fully amortized loan over 26 years ($3800/mo) :-)

4. Depends on your investor's demands. Maybe 10% simple interest or 80% of profits or anything else.

5. Use typical closing costs for a cash transaction: title insurance, recording fees, inspection, whatever else is customary in that city/state.

6. If the seller is OK with the price and terms and that benefits you as well, it's a win-win

 here's the worksheet:

https://docs.google.com/spread...