Can you help double check my numbers?
My friend put me in touch w/his friend who is an investor (and trying to raise money). We talked on the phone yesterday and he sounded like a knowledgeable guy. He then emailed me an "Investment Summary". I can't figure out if it's a deal he's already done or something he prepared for other potential investors. There is a lot of missing info and I had to try to piece some of the puzzle together for myself. It was actually great practice b/c I'm a newbie and this is helping me a lot.
Anyways, either something just seems very off about this "deal" or my calculations are way off. Below is a portion of an email I am sending him asking him to confirm/verify my numbers. Will be interested in hearing his response vs. what you all have to say.
- Not sure if this is a buy and hold or a flip
- What does Cash on Cash 1.43x mean? I typically seen it expressed as a %, does it mean 143%, probably not b/c that's astronomical
- I see the going in Cap Rate but do not see NOI
- Based off Property Price ($1.07MM) and 4.54% going in CR, this means NOI is roughly $48.8K, is this correct?
- I will just assume NOI is correct, based off the $1.39MM loan, that would mean $80K in debt services ($6,665 x 12), leaving a $-31.2K cash flow a year, that makes no sense haha
- Now we have cash flow for year three, we get a -6.7% cash on cash return, again makes no sense
- Using year 3 sale price as an example ($2.48MM) and the 5% cap rate listed, this means annual NOI is $124K
- Debt service is $80K, leaving $44K in cash flow, can you confirm this?