Posted by Brent_IL on August 25, 2003 at 10:49:07:
Add the monthly lien payments and operating expenses for each month and multiply by the length of time that you expect to own the building. Double that figure and that is an estimate for holding costs.
When most investors refer to the profit being thin, they mean that it isn’t enough given the effort involved and the resources that would have to be committed to the deal. If you can buy a house for $15,000 and you know that you flip it before closing for $20,000, $5,000 is probably enough. If you have to finance a $150,000 house to make $5,000, it probably isn?t worth it given the exposure. If all you have invested is a little time and have no responsibility, e.g., a straight option, it?s all good.