Question About Rental Property Analysis in The Book on Rental Property Investing

[Mathew Constantine]

Hi all! I've been reading Brandon Turner's book, The Book on Rental Property Investing and am noticing a discrepancy. He states a loan amount of $60,000. On Page 134, he lists the following when analyzing a deal:

Sales Price: $132,490.00

Sales Expenses: $17,000.00

Loan Balance: $55,004.72

Total Invested Capital: $35,950.00

Profit: $24,535.28

I agree with his thought process here when he calculates net profit, but I'm trying to verify the net profit by adding up all the sources of income over the past five years in his example by doing the following:

1. Appreciation over five years=$12,490 (see chart on Page 133).
2. Cash flow ($297.73x12x5)=$17,863.80 over five years.
3. Loan paydown: ($60,000-55,004.72)=$4,995.28 over five years.

Sales Expenses are still $17,000.

Doing the math, profit= $12,490+$17,863.80+$4,995.28-$17,000=$18,349.08

There is a $6,186.20 difference from the net profit he calculates.

My question is: Is this $6,186.20 difference due to the forced appreciation gained in the property from the rehab he does in this example? If not, am I missing a source of profit? I have gone over this many times. Please help. TIA!!!