Net Profit divided by purchase priceso you make 100k a year net off of a property you bought for 1m, your cap rate is 10%

It appears they calculate gross ROI based on gross income divided by property price.

I would save it all until I could sleep at night knowing I have enough money in the bank to cover the worst case scenario.According to a common "formula" used on BP (50%), you would divide the 1,400 in half to get your expected non-financing expenses (everything but P&I).

On your posted numbers, rehab plus acquisition of $109k divided by the exit of $163k is a 68% deal which should be a go.In J's numbers, he was high on several items as he eluded to, taxes for example would not be more than $900 for. 6 months.

CAP Rate is not just a bogus number -- I am aCommercial Mortgage Broker-- Lenders and Appraisors always like to use cap rate number --When I do Loan Package -- I estimate the Value of Property based on CAP rate --which is based on NOI -- In this case --NOI = Net Operating Income is before EBITDA -- Earnings BeforeIncome Tax, Depreciation and Amortization --It does not inckude any mortgage payments --The Value of the Property is NOI divided by Cap rate -- For example--an NOI of $200,000has a value of $2.0 million at 10% cap rate...I have closed several loans and never had any one questioned my values.

In the multi-family I own, two furnaces heat four apartments, so there is no way for me to divide the heating bill amongst the tenants.

Built a divided fence in the back yard and removed some trees.

Hi Everyone ,Let me first introduce myself to the community.My name in Kenrick from Aruba(the caribbean), I am a young entrepreneur on the island also involved in real estate.In this discussion I will elaborate more about types of real estate investments in Aruba & where I see opportunities.Aruba is a part of the Netherlands, but still we are autonomous, this being said the Netherlands still has some responsibilities with Aruba and other caribbean islands.Aruba has its own currency & its own government.For more info on Aruba: http://en.wikipedia.org/wiki/ArubaReal estate in Aruba:Arubas real estate I would describe as a strong market, we have seen only growth in real estate prices this after more then 20 years after a market correction due to the closing of a refinery leading to job loss and Aruban citizens migrating to other island.Aruba in the past years have seen major condo projects & is still being invested primarly from Venezuelan investors with there condominium projects.Property land prices have been rising as supply does remain short of the demand of houses.Land:In Aruba if you want to build your own house, 2 ways you could do this either buy a property land or a government owned land leased to you.Property land being the most expensive(most valueble) & government owned land being the cheapest  with restrictions are still available depending on size average size needed is 300 sq. meters or more.Housing projects is still a big business because of supply and demand, dividing big pieces of property land and developing them into housing project is a good business with draw back in regards to getting permission from government departments, must have a concrete/paved road, infrastructure in place all expenses for the real estate investors costing time & money with could lead into a delay of a year or more.Opportunity:Opportunity to buy either a big piece or a small piece of land which could easily be divided can easily double your money in 3 to 6 months time.

Id have to sub divide it away from my property but it can be all worth it depending on how or if it can be done! 

You then take the cost of buying down the interest rate and dividing by the difference in the costs of the interest calculated above.