Subtract out the fees, and it just doesn't make sense.

Subtract the $20,000 for repairs, another $5,000 for holding costs and contingencies, and you're at $45,000.

Assuming net income is $9400/month with operating expenses @ 40%, then monthly NOI is $5640.Annual NOI is 12 x $5640 = $67,680.I wouldn't count the "potential" income from the other lots...no reason the seller should get paid for income he isn't generating.Given NOI of $67,680, the value @ 10% cap would be $676,800.From that, you might want to subtract the maintenance costs to arrive at a reasonable price.All that said, I wouldn't take the seller's word for the 40% expense ratio.

Uwe said it best...dj, are you also taking into consideration....other factors.Such as water, sewer, trash, HOA, gas, heat, electric...Often times owners of multi family properties pay 1,2 or up to all of these cost, which should be subtracted from the gross income.

Subtract your holding costs and fixed fees (commissions, closing costs, etc), and I imagine you still have at least $15K in equity on a $60K property.Assuming you can sell it quickly and assuming you don't employ any leverage, that's a 25% return in short period of time.

Subtract off the $899 payment and you're $400 a month, $4800 a year in the hole.

Subtract the repair costs.

So, $800/mo for rent times 50 - repairs needed to get it into good shape.Of course you subtract your profit from each of these formulas to get your offer price.Then, when I approach individual investors I have whatever scenario best meets their expectations.Eric W - Do I want to see the inside of the property BEFORE putting it under contract or should I go ahead and put it under contract and then get out under my inspection contingency if something turns out different than expected?

This is the reason that some states do not accept quit claim deeds at all.Your best way to proceed, assuming the TLC is the only encumbrance, is to take your figure that you have in mind and subtract what it will cost you to pay off the TLC and any other TLC's, then offer that amount to the owner.When you take that QCD to record it you will then also pay off the TLC's and your QCD will then transfer the control of the property to you free and clear (again assuming theonly encumbrance is those TLC's).

When creating the loan the Owner would reference the Applicable Federal Rate for the month the loan was written and set the interest rate at a rate greater or equal to the Applicable Federal Rate.Must report to the IRS the total amount of interest paid by the buyer at the end of each year. (1098 mortgage interest statements)Seller must record the buyers payment, calculate the changes to the principal and interest, subtract the appropriate amount for property taxes and insurance.The buyer can destroy the contents or the property and let it fall into foreclosure and all the seller would receive back is the property.Buyer advantages:Easy qualification, buyer can have poor credit and still qualify for note.No loan costs.Faster Closing then having to wait on a bank to qualify and close the deal.The buyer has time to repair their credit and then try to qualify for a conventional (bank) loan with a better interest rateThe main hurdle you have is in how you approach the home owner.