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Updated about 3 years ago on . Most recent reply

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61
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Bruce M.
  • Flipper
  • Philadelphia, PA
2
Votes |
61
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Formula for evaluating a buy and hold property

Bruce M.
  • Flipper
  • Philadelphia, PA
Posted

Good morning all. I need a little help as I'm trying to crunch numbers on different properties and arrive at a number that that I should offer using the 2% rule......well kind of. I hope I explain this right. I know what the 2% and the 1% rule is. My question is, if armed with only the rent info and the repairs, is there a way to come up with the max amount you should pay for a particular property? In essence I'm trying to somehow develop a formula that does the 2% rule backwards. For example if a house is 68000 and requires 40000 work, I'm all in 108,000......under the 2% rule I'd need $2160/month in rent. Now is there any figure i could use that if I have the 2160/month figure and I know that a place needs 40000 work that I arrive at a MAO? Please tell me if this is even possible. I hope this question is clear.

Most Popular Reply

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1,338
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684
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Steve L.
  • Investor
  • Rancho Cucamonga, CA
684
Votes |
1,338
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Steve L.
  • Investor
  • Rancho Cucamonga, CA
Replied

Yea, just some simple math.

Project Rent / 2% Rule - Repairs = MAO

2,160 / .02 - 40,000 = 68,000

2,160 / .015 - 40,000 = 104,000

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