Anyway, the correct way if your valuing by the income approach is to take the total yearly gross income, subtract all of the expenses except debt service (principal and interest payments).

Find out the market rent (you have no control over this), subtract the expense, subtract your desired profit and then you have the max payment.

So, if I have $15,000 into a deal, and I could get 5% for CDs, I'll subtract off $750/year in opportunity costs.

So 70% of $111,000 is $77,000.We then subtract from $77,000 the repair costs.

Rental Income = 1200 (seller said he had it at 1400 before) Expenses: Mortgage - 335.62 Taxes - 396 (gross I know) Maintaince - 25 Repairs - 80 Total -- 836.62 Rent Income less expenses = 1200 subtract 836.62 = 368.38.

But then payment on a 20 year, 8% loan is $3187/month, or 662 in the hole.If I wanted to get $700/month in cash flow, I'd subtract that $700 from the $2625 NOI to get $1925.

So I checked out the income for the previous 3 years, subtracted their 45% and then simply deducted my carrying costs from the remainder and it was a number I was happy with.

If you want an assignment fee, you'll need to subtract that off, too.A lease option is going to have an option to purchase.

I am fairly new but what i have so far in my learning is that u can pretty much find comps anywhere but that doesn't mean there actuate, and as far as estimating in some book and programs they tell u to pick a number, for example what i have learned is that depending apon the shape of the house going from ugly to real ugly to junk 10,000, 20,000, to 25000 and also depending apon the size needing to be in the area of 1000 to 2000 square feet then to take these unreliable number in to this formula ARVx70%-repairs = MAO and back off slightly for profit now like i said i am new so ,but i do know this is complelely dumb for me use do gurus bring your answers and add your knowledge or subtract from this and tell us newbies how to correctly run the numbers and come up with offer that guarantees u money even if u have to flip the deal over to and end user of course that is if it sales lol...

Subtract desired cash flow, say $100.