Figures and Calcs

[Red Peterson]

Hello everyone! need help locating a post or category(ies) to guide me in putting together numbers for assessing a deal. i.e. Whats a good return $ per $ (out of pocket $ vs income), expenses, etc. THANKS!

[Ricardo R.]

Okay I understand now... yes all of the above. This is what my spread sheet includes, I'll share: The 1) purchase price, you're down payment, your rate and your term which will = your principle; 2) then you need to factor in your taxes and your insurance + your principle will give your monthly mortgage payment. 3) your rent - (your mortgage payment + your monthly vacancy 8% (which is almost 1 month a year) + management fees + utilities + maintenance 5% + CAPEX 5% (but may be more or less depending on age and type of property) + HOA + Other monthly costs) = your monthly cash flow. 4) You're monthly cash-flow x 12 = you're net yearly income or NOI.

Now to get your ROI: A) you're down payment + you're closing costs (about 2% of purchase price but varies + renovations + appliances + advertising/listing fees = your total cash invested.

Take your NOI and divide it by your total cash invested and you get your ROI.

I typically like to get at least $300 (the minimum) in monthly cash flow and no less than 12% ROI but aim for 15% when you consider that the average stock market return over 40 years has a return of 7%-12, of course this can change for your area and even so, what deals you get. I hope this is not to confusing if you'd like I can email a copy of my worksheet. It's worked for me but feel free - anyone - to shoot holes in it.

Hope this helps. 

Alex