You left out the cashflow portion of this equation to know if the property will make positive cashflow if you take out the whole 80% in the cash out refi?

., are used to simplify the equation and are not dissimilar to anyone analyzing stocks who uses a price to growth ratio rule of thumb (PEG ratio) or price to earnings ratio (P/E) rule of thumb.

For your own comfort level your acquisition cost, the repairs, carrying costs and selling price are all part of the equation.

New home sales were 421.000 on an annualized basis this past November (the last reported month) which equates to 35,023 new homes per month.

@Christopher Schmidt, your scenario and mine are identical; whereas A and B are parents and obviously I am the C in this equation.

RE math is not difficult, what can be difficult is to know when to divide instead of multiply or how to set up a simple equation, recognize the proper way to set up the math problem.Can you sell ideas, concepts or things?

This equates to $108,000 per year and I'm using a rough 35% for expenses yielding $70,200 NOI.

Google it, and the 1st link from office.mircosoft.com should be the template you need.3. for the Excel spreadsheet, think of time progressing downwards; the further down in the rows you are, the further through the months4. to map each property, give each one 5 columns {Month #, Mortgage Balance, Principal, Interest, Additional Payment} * that is the month you're on in your repayment to the bank (1-360) * balance due to the bank * that month's principal payment (this is why it's handy to have the amortiation worksheet) * interest for that month * and what additional payments you'll kick in from the other properties.5. when adding a new property to the sheet, just list the following as headers so you can add them into your equations {purchase price, down payment, P&I, cashflow when mortgaged, cashflow when paid-off}.6. to make this all work, you take an iterative process * start by charting your 1st and only property, and plot it out so it takes 360 months to pay off * add in your 2nd property, and add its cashflow to the "additional payments" on you 1st (or have your 1st property's cashflow pushed into your 2nd .. whatever you like) * keep doing this up to your 15th (or in my spreadsheet's case, my 5th property)Some insights I've gained:* the snowball effect works!

The money is nice but not the only motivator in the equation.

Taxable income is after your personal exemption and itemized deductions have been applied, so it equates to gross income of at least $46,250, and likely more if you itemize your deductions (which you probably would if you have a mortgage on the townhome).