Understanding the numbers

[AJ Felix]

So, I am trying to create a deal in my head to try to understand the numbers and what deals look like in real estate. These are just numbers made up for the sake of understanding and aiding my visual learning needs. Just looking for some professionals to let me know if my numbers simply make sense. If not, please enlighten me. Also, what does the phrase "all-in" mean when discussing real estate financials?

$120,000 ARV

$110,000 ask price

$82,500 Purchase Price @ 25% discount market value

$20,625 down payment 25%

$61,875, finance amount

$4,125 closing costs

$5,000 rehab costs

$87,500 purchase price + rehab costs

$29,750 rehab +down payment + closing costs

$90,000 refinance at 75% LTV

$4,125 closing costs

$24,000 cashout

$5,750 money left in deal (29,750-24,000)

[Joe Villeneuve]

Originally posted by @AJ Felix:

@Joe Villeneuve I understand what you're saying. I just used 25% because I hear some lenders may require that much for an investment property vs 20% so I just go with the higher amount. As for the hold side Of things, the cash flow and operating expenses are assumed to be All favorable. Favorable from what I learned for a SFR is a cash flow of $200 and above. So, for the sake of this example let's just say that I am cash flowing $300 after I factor in all expenses.

Sorry, assumptions are not acceptable in REI. You're missing the point of what I'm saying, or at least you're missing the importance of it. It isn't just the end CF that is important in the analysis. It's also all the individual numbers that make up that cash flow...of which some come from the numbers you're working with.

REI is nothing but a math problem with $$$ in front. The right side of the equal sign in this case is the ultimate CF. The left side is made up of two sets of expressions...one for the entrance and one for the exit. Each expression is made up of signs, constants and variables. The best REI live on the left side of the equal sign, where they can control those expressions. The lazy ones, or the shortcut takers, want to live on the right side. They can be successful, but they are not in control.

What you want to know is if the entrance expression works based on the result on the right side of the equal sign, without having any input from the exit expression.  It can't be done.

My suggestion to you would be to find an actual property somewhere and use all the actual numbers...entrance and exit.  You overall desire is an excellent idea,...just incomplete in the needed data.