How do you determine what you think is an appropriate amount to subtract for profit on deal?

By the way, when people use PITI, they are actually mixing some operating costs (insurance and taxes) with debt service (principle and interest), therefore, I think a better formula to use is the 50% rule (ir 45% in this case study) and then subtract debt service.

This is the theoretical maximum you can pay and NOT leave any of your money in the deal after refinancing.This is NOT a requirement to do a deal, however what is acceptable to leave in will be different for everyone depending on your own cash flow and financial ability.Starting MAO – Get this number by subtracting another 15% from your MAO.This is a decent starting point to begin your negotiations.If you get no counter offers at starting MAO, you will need to increase your initial offer.Market conditions will always impact starting MAO.

There may be some slight changes since the official counts come out after all certificates are paid.Number of liens sold to investors:2015 - 2,039 (1,808 bought by investors - because 231 struck to county as no bidders)2014 - 2,5752013 - 2,382Total dollar of liens sold:2015 - $2,678,533.35 ($2,336,551.03 bought by investors - $341,982.32 not sold)2014 - $3,015,871.872013 - $3,435,014.32Average rate of return overall:2015 - 6.75% (5.40% by investors when subtracting out struck to county liens which all get 16%)2014 - 5.86%2013 - 6.55%Number of Investors who won liens:2015 - 89 2014 - 1162013 - 201Total Number of bids for all liens:2015 - 10,5252014 - 18,8122013 - 99,073,789You bid down the interest rate in 1% increments from 16% down to 0%.

Subtract taxes, insurance, maintenance, pain-in-the-butt nature of Baltimore City, whatever you want, but that still yields a pretty good return. 

When calculating CashFlow and CoC Return I mainly factor in my Expenses Per Month AsMortgage (at 20% down at 5% interest for 30 year fixed)Monthly TaxesMonthly Insurance10% of Rent for Vacancy10% of Rent for MaintenanceThen I take my expected rent (using rentometer,craigslist,knowing the area) and subtracted my expenses to get my cash flow?

So PITI subtracted from the rent is your monthly remaining cash flow - assuming no other expenses, which unfortunately isn't the reality of things - there will be expenses beyond PITI.

You are expecting 1600 which is a bit higher than 1% but far from 2% If you use the 50% rule after deducting for maintenance , insurance, taxes , vacancy and property management you would have 800 net operating income after subtracting your loan of $385 you have net income of $415 monthly which would shrink considerably if your loan escalates after 5 years.

I decided to use the formula - Tax Value ($64k) - Repair (@$20 sq ft= $18,320 ) divide by 2 then subtract my wholesale cut ($5k) = to equal $17,840 offering price.

Of course, with rentals you will need to included any anticpated value increases as well as net income and any equity buildup, and subtract deferred maintenance.