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Hello,

I own a used car dealership. There is a 4 bay garage that I have. I want to rent the back out for automotive repairs and keep a bay for myself. I wanted to know if I can have 2 separate business's. (My car dealership and the automotive repair business). Would you know what kind of lease agreement would fit this criteria? Would I have to contact a lawyer for this situation? I am located in Rhode Island. Any information would be helpful. Thank you for your time.

Brian

I was a little off in my analysis but not that bad, the calculator in projecting a yearly income of

I added on a little more to my monthly expenses.

Gross Rental Income $4,000.00 $48,000.00
Vacancies ($600.00) ($7,200.00)
Gross Operating Income $3,400.00 $40,800.00
Expenses ($1,250.00) ($15,000.00)
Net Operating Income $2,150.00 $25,800.00
Debt Service ($1,342.00) ($16,115.00)
Before Tax Cash Flow $807.00 $9,685.00

Theres a few things I don't understand,

How is the cap rate 9%
I'm getting ( 9685.00 / 280,000 = 3.4 % )

Financial Ratios
Gross Multiplier 6 %
Cap Rate 9 %
Internal Rate of Return 17 %
Yield 17 %
Debt Coverage Ratio 1.60 1.64 1.68 1.73 1.77
Loan to Value (LTV) Ratio 80% 75% 72% 68% 64% 61%
Ownership Percentage 24% 27% 31% 35% 38%
Cash on Cash Return (BT) 17 % 18 % 19 % 20 % 22 %
Cash on Cash Return (AT) 15 % 16 % 17 % 17 % 18 %

How do you read and understand the cash flow page ?

Net Operating Income (NOI) 25,800 26,466 27,148 27,843 28,554

Debt Service -16,115 -16,115 -16,115 -16,115 -16,115

Before Tax Cash Flow 9,685 10,351 11,033 11,728 12,439

Depreciable Allowance -8,145 -8,145 -8,145 -8,145 -8,145

Mortgage 1 Interest -13,365 -13,195 -13,015 -12,824 -12,621

Taxable Income 4,290 5,126 5,988 6,874 7,788

Taxes Due -1,072 -1,281 -1,497 -1,718 -1,947

After Tax Cash Flow 8,613 9,070 9,536 10,010 10,492

How come the cap rate is now 9.21 % ?

Gross Multiplier (Price/GSI) 5.83
Cap Rate 9.21 %
Internal Rate of Return 17 %
Yield 17.00 %
Debt Coverage Ratio 1.60 1.64 1.68 1.73 1.77
Loan to Value (LTV) Ratio 80 % 75 % 72 % 68 % 64 % 61 %
Ownership Percentage 24 % 27 % 31 % 35 % 38 %

Hi Ohio Realtor,

Thanks for the response. I will check out the url link you provided.

Sorry to say but I just made the numbers up in my head. I wanted to see what other people thought on how I analyze a deal lol and see if I did it right ? cash on cash, cap rate etc...

I'm putting down 20%

How come debt coverage is not included in expenses ? Why is this ? Your debt is a great deal of "overhead" in your property.

Hello,

These are made up figures. I just want to see if I am calculating this correctly. Any advice/opinions are welcome.

Thank you.

Bought for 280,000

20% down payment = $56,000 ( $280,000 x 20% = $56,000 )

loan = $224,000 ( $280,000 - $56,000 = $224,000 )

30 years

7% interest

Loan Amount = $1490.27

Taxes = $400 per month

Insurance, Maintenance, Expenses = $600 per month

$1490.27 (Mortgage) + $400 (Taxes) + $600 (Insurance, Maintenance, Expenses) = $2490.27

4 units at $1,000/ unit = $4,000

$4,000 x 15% vacancy = $600

$600 - $4,000 = $3,400

$3,400 - $2,490.27 (total expenses) = $909.73 (net cash flow)

$909.73 x 12 months = $10,913.76 (net operating income)

$10,913.76 divided by $56,000 = 19% cash on cash

$10,913.76 (net operating income) divided by $280,000 (asking price) = %3.8 cap rate

How do you find information about a city/town when you live out of state?

Thanks, I just checked it out

Whats the math that you have to know and understand when evaluating a rental property ?

What information does city/town hall give you when you look up a property? Liens, encumbrance?, etc... Also, how do you put a house under contract?

Thank you

What information does city/town hall give you when you look up a property? Liens, encumbrance?, etc... Also, how do you put a house under contract?

Thank you