How does BP rental property analysis tool calculate "Profit if Sold"?

Question

I am testing out the BP rental property analysis tool. I cannot for the life of me figure out how the "profit if sold" line is calculated (picture below). I've tried to get to the same number a million ways, but to no avail. Does anyone know how this is being calculated?

Cody Murphy · Answer

That makes sense. I will play with some calculations that include the down payment and cash flows prior to the year of sale.

Bill B. · Answer

Cody. Your example about year 5 isn’t profit it’s cash at closing at best.

Using your example let’s pretend I pay $500k for a building and put down $200k. I sell the very next day for $500k minus the $300k I owe and $35k in closing costs. That doesn’t leave me a $165k profit ($500k-$300k-$35k=$165k) . It leaves me with a $35k loss. ($500k paid minus $35k selling costs = $465k... $465k Minus the $500k purchase price = $35k loss.)

using your math an all cash purchaser would have a massive 93% “profit” the second the made a purchase.

Clayton Silva · Answer

It has something to do with negative rent. I am not sure what you put for the lease amount but that is the negative net rent for those 5 years. So Rent - management fees - capex - repairs and maintenance - PITIA for 12 months for 5 years is where that 100k went.

Cody Murphy · Answer

Let's look at Year 5 for example. Sale price of $563k would mean closing costs of $42k (about 7.5%). After subtracting closing costs and paying off the remaining loan balance, I get a profit of: 563,000 - 42,000 - 397,000 = $124,000. However the calculator is showing only $12k in profit. What happened to the missing $112,000 ??

Sammy Randazzo · Answer

Hey I built an AI acquisitions assistant for real estate investors that finds and scores deals automatically, writes up creative offers. It’s designed to save you time, boost your deal flow, and help you close more without hiring an acquisitions team. If you’re curious let me know I’ll show you how it works

Clayton Silva · Answer

It's calculating a little over 7% in closing costs on the sale side. That is the exact number I use when doing my own math. About 5% in agent commissions (2.5 list side, 2.5 buy side) and another 2% in closing costs. That is a pretax calculation so that doesn't even factor in capital gains. If you want to know how I got this, take the year 30 calc and take 856k profit / 924k sale price to get about 92.6% or 7.4% in closing costs.

How does BP rental property analysis tool calculate "Profit if Sold"?

How does BP rental property analysis tool calculate "Profit if Sold"?

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