With this option, I'd like to split profits after subtracting some $$ for labor done by us.

Start with your rent, then subtract out 10% for management, 10% for maintenance, 5% for reserve, taxes etc.

Then you subtract the cost of the fixup.

Keep in mind you'd have to subtract the interest payments on the HELOC too.So if you were making 40k a year on the property and were paying the mortgage on the 200k loan (1st mortg on the new property) and the 100k loan (2nd mortg or heloc on your primary), how much money would you be making?

Once I was sure I had a good tenant, and everything was going good, I would add up my reasonable costs for rerenting the unit, subtract that from the amount and send her the difference with a "good luck, here's what I didn't require to get the place filled' note.

To determine value based upon income (income capitalization approach), you can use the following formula:V = NOI/RV = ValueNOI = Net Operating IncomeR = Cap RateNOI is calculated by itemizing all of the operating expenses and subtracting it by the gross rents---using the figures you provided, NOI would be (using the 3270 income figure) approx. 29K.

That being said, it is imperative that you understand the particular areas average operating costs including taxes, insurance, management, maintenance, utilities, etc.For a quick financial rundown on a property, I take the gross rents, subtract 10% for vacancy, multiply that AGI by 60% (40% oper. xpense) which gives me an estimated NOI.

Then subtract off the cost of the work, either the rehab or the scrape and rebuild.

I want to know if anyone here has tried setting up and LLC in which they loan the company money out of their income to subtract from the years gross income?

You will see things by MikeOH and some others who's names I forget.Most other than Mike focus on buying for no more than 70% of the ARV after subtracting all the costs (ALL costs).Mike is more focused on the cash flow.