Its really hard to lose with that formula and has a lot of benefits.

Hello BP community, I’m very reserve individual trying to learn how to invest in real estate, I’ve been trying to learn the formulas on my own but I have to be honest, I don’t know if Im running the numbers correctly and in order to achieve my goals I need some help.

These agents do not understand how much it costs to care for the property and make a positive cash flow from the rents after all expenses are paid.I use the following formula for evaluating rental properties for a positive cash flow because I lost money not doing it this way.I do not use CAP rates.They are a lie.The mortgage interest is not included in the expense figures.This formula uses Gross Monthly non-section 8 rents which equal 1% of basis.Example:$1000 per month in building rents is equal to $100,000.00 basis.The rents at 1% of basis will pay back the entire investment purchase price, the payment to service the loan, principle, interest, taxes, insurance and the down payment money required by the lender.Now you must Subtract 25% from the “Basis” to pay for management, vacancy, repairs and expenses of the property which equals $25,000 subtracted from $100,000.00.We now have a purchase price of $75,000.00Now you need to subtract all needed, deferred maintenance repairs from the $75,000.00 to bring the property into rent ready condition and mechanically up to date for your final purchase price.If you have $25,000.00 in repairs you would subtract it from the $75,000.00 for your final purchase price of $50,000.00.In negotiating the transaction price I only use the current rent role.

Good Morning BP community, first let me say that I have been following the forums, pod casts, blogs and everything on here for about a month now, and I love this community, so much amazing information.I am a new investor in Florida, and I have been looking at rentals.I've read about cap rate and I believe I understand the formula for calculating it, but I still have some questions about how valuable it really is and if cash flow is more important?

I am not a big fan of Real Estate guru's but these guys have a formula for success that I can relate to and it's really working for them.

Rich Dad Poor DadRich Dads Cash Flow QuadrantRich Dads Increase your financial IQThe Real Book of Real EstateThe ABC’s of RE InvestingThe ABC’s of PMRich Dad RE Tax AdvantagesThe E-MythThe 4 Hour Work Weekhttp://flip2freedomacademy.com - free e-bookFlip2freedom episode 77[http://www.flip2freedom.com/a-3-step-formula-to-a-successful-balanced-and-insanely-profitable-2012/] - podcast - LISTEN TO THIS TODAY!

I have created a specific formula to help you calculate how many buyers you need based on your deal flow.

@Charles Scott We usually use the same formula that we'd use for a rehab.ARV-Land-Improvement to Land- Buildout -Profit = Price willing to pay for landExample, if homes are selling for $800K, the land is $200K, improvements $50K, buildout $350K- hopeful profit $100K then it leaves you with $100K for fees, misc expenses, and extra profit.

The formula seems sooo simple.

Since the last crash was caused by housing the government did not need to immediately step in to solve it and it took time for them to come up with the formula.