Posted by Ed Garcia on March 05, 2002 at 23:45:26:
I gave you a great post and then pushed a button an blew it away.
I’m now tired so rather than try to reconstruct it, I’m just going to give you bottom line.
We don’t do deals for the practice; we do them to make money.
So here is the bottom line on this deal
Sales Price $221,500
1st Mortgage 180,000 rate %7.75 for 30 years with a payment of $1288
Seller carry 29,000 at 7% interest only for 10 years. Payment will be $169 per mo.
This property would more than likely be appraised using a GRM (gross rental income).to establish value. Because I don’t know the area, I’m just going to simplify it and say that if I capped the deal out for you using only 25% in cost and expenses, I would get an NOI (net operating income) of $23,400. At a 10 cap the property would be valued at $234,000. I just gave you a deal at a 101/2 cap, which is respectable.
Regardless of my formula, when the smoke clears you’ll make about $500 per month.
Fletch, to do a deal just to do a deal with no rhyme or reason doesn’t make sense.
Don’t get emotionally involved. This is not a personal thing, it’s an economic one.