Have a great WRAP deal. How do I structure?

Question

Owners called me.  They want out.  NOW.  "we want to be able to forget we own it"....

Nice 2 unit. 3/1 each side.  rents 650/side.  Mortgage payoff is 65k or 640 monthly with tax/insurance bound.   After management and 10% maint it's easily a 100% cap rate deal (make each year what they pay me in assignment fee).

How do I describe this deal?

One easy deal....6k gets you a 2 family turnkey property.  Passed by city of Wilkes-Barre, (soon) fully rented.  Mortgage payments about $400/mo.  Taxes/insurance another $200.  Management 200.  Maintenance (basic coverage package) $100.  Leaves approximately 600/mo NOI.  that's 120 percent Cap rate !  (7200 on 6k invested).

Matt Devincenzo · Answer

You need to look at the numbers and terms you are using here and use the right ones for what you are calculating. I'm not saying that to be mean I just get emails with bad numbers or incorrect statements all the time and I immediately look at them with a negative light, and usually they end up not being good deals at all when the person can't properly calculate the numbers that they sent out.

CAP rate has nothing to do with the amount of money in the deal whether it is 10% down or 100%  cash purchase the CAP on this is....well I don't know because we don't know the purchase price. It's NOI/capital cost. So it would be 7200/(6000 + underlying mortgage amount)

Now what you are describing as 120% is the cash on cash return and that does appear to be pretty awesome from what I've seen so far though I just did a cursory look.

Jerry W. · Answer

Congratulations, looks like a good deal.  Unfortunately you have not posted sufficient information for me to advise you on anything.  Need things like purchase price, terms of interest rate, length of loan, money down, value of property, etc.