From there, multiply out your re-fi amount (75-80% LTV of the ARV), then subtract your renovation expense to ensure you'll have enough equity to get all (or most) of your money back out.

2% of property value per month works out to a starting cap rate of 24%, then you start to subtract out property taxes (say 2%), insurance (say 1%), management fees 3%, and that biggest of all...maintenance, depreciation (deferred maint), and vacancy...(2,3,2%...)...

You need to take your tax basis (what you paid for it plus those improvements) and subtract that from what your net sale will be.  

If not, you need to find out what kind of immediate repairs it needs and subtract that from your offer price.Hope that helps.Nick 

A 10 cap rate on a 750,000 property would be Net rent of 75,000 per year.CCR is cash on cash return, so if you have a 25% down mortgage at 4% you might have a substantially higher CCR, say 32,200/187,500=17%, but you need to subtract your debt service and that would of course reduce the $32,200 substantially (about 20k actually), so CCR would be 12k/187.5k=~6% CCR

Then I subtract (for the year) my totals): accounting, advertising, cleaning, cap. expenses, insurance, lawn care and snow removal, legal expense, maintenance and repairs, management, utilities, taxes.  

They are now being signed and notarized and will be filed with the county at the same time the deed is signed by both heirs, and the costs below will be subtracted from the purchase price.Total attorney costs: $200Expected Filing costs: $350I am pretty pleased how this has worked out.  

I typically subtract 3%, of the ARV.Realtor Fees: What is the commission you are willing to pay your listing agent (unless you are the listing agent) and the buyer's agent.

Not to mention reserves for roofs, paving, etc.I tend to see a lot of T12s that show Opex as 50-60% of Gross rents then they show NOI of 50-40% and THEN they show 20% spent on CAPEX some of which looks ongoing to me.So my question is this, for folks that evaluate a lot of T12s, do you subtract a portion of Capex as reserves from the NOI before applying cap rate?

Hi Natalie, I think he subtracted the $30k to show the maximum he can buy the property for and get the minimum $30k he will accept as a profit.