All Forum Posts by: Account Closed

I like to use Net Present Value when evaluating deals, but I don't see it a lot on this forum or other real estate evaluations. Can anyone shed some light on why not to use it?

Hey I'm interested in this too more for creating a screener than for actual analysis. Are there more rules or ratios people use regularly? I understand they can be deceiving but just curious.

Don't do it

Based on the above info you're only getting $50 free cash flow a month forgetting the extra mortgage payment. It would probably take you 10 years to make back the cash layout you need to payoff the mortgage if 500 @ 4% = 60k mortgage. Is this property really worth it. I would keep the capital and look for something that had better cash flow.

The approach is on the right track. Although always hammer out something like this with your attorney. You might consider converting your LLC to an S-corp to save on SE taxes if the amounts coming to you as the GP are substantial. This setup allows for uneven distributions at the LP level with corp protection for the investor.