Step 2: Computing Your Offers
After you have computed your Adjusted
NOI, select the Offer Generator tab. Notice that the Deposit
Amount and Net Operating Income are taken from the Net
Operating Income screen. Although these values come from the
Net Operating Income screen you can manually change the values
here (For example you may want to lower the NOI amount for you initial
offer so that you have room to negotiate). If you do manually adjust
the values, the values are valid for this screen only. They do not
carry back to the Net Operating Income screen.
After you are satisfied with your
Deposit Amount and Net Operating Income amount, you can
customize your financing options (found within the Financing
Options panel). The default financing is via a bank for 100% of
the NOI value. The financing options range from 3% up to 10%. You can
customize the financing options to whatever your
liking and for whatever you can conceive. To edit an existing
financing option, select a financing option
from the table of financing options and click on the Edit Financing
Option button. For example, if you selected the default Bank
financing option the following dialog box appears (Figure 4):
Figure 4: Editing an Existing Financing Option
To change any of the values, select
the desired field and enter a new value. When you are done, hit the
Save button. The changes made are reflected in the Financing
Options table. If you wish to delete a financing option, select
the option and click on the Delete Financing Option button. You
will be prompted to verify that you wish to delete the option. If you
select Yes, the financing option is
removed from the Financing Options table.
In order to add multiple financing sources (such as seller financing
or third party financing) to derive your desired NOI value, click on
the Add Financing Option button. The following dialog box
appears (Figure 5).
Figure 5: Entering a New Financing Option
You must enter a value for each field
within the Finance Wizard dialog box. The Financier Name
can be any name you wish. The Percent Financed must be a number
from 1 – 100. Please note that the sum of Percent Financed for
all of the financing options must be equal to 100%. The Minimum
Finance Percent and Maximum Finance Percent must also be a
number from 1 – 100. Once you are satisfied with the financing option,
hit the Save button and the financing option appears in the
Financing Options table.
After you have completed choosing
your financing options, you can select the number of years to finance
the property. Your choices are 5, 10, 15, 20, 25, and 30 years. By
default, all loan terms are selected. If you don’t want a particular
term, uncheck it. Likewise if a particular term is not chosen and you
wish to consider it, check it.
Now that you know how much you can
pay per month (your adjusted NOI), how you would like to finance the
payments, and the length of time you wish to finance it for, you can
determine how much you can pay for the property.
To do this, click on the Calculate Offer button.
For each financing option there is a
corresponding tab in the Offers panel containing a tree of the
chosen financing terms. Double clicking on a node of the tree expands
it displaying the principal and financing rate in increments of .125%.
Choose the finance rate you desire by selecting it. Once selected the
chosen offer appears in the Current Offer table. If you choose
a different offer from the same financier, the existing chosen offer
is replaced with the new chosen offer. The Total Offer (the
summation of the deposit and chosen offers) is displayed below the
Current Offer table.
Once you are satisfied with the offer
you have generated you can store if for future reference. You do this
by clicking on the Store Selected Financing Option button. If
the offer selected is valid you get a message letting you know that
the offer has been successfully saved. If you did not choose an offer
from each financier, you get a message letting you know the financier
who you have not selected.
You may continue with this exercise
saving as many different financing options as you wish. Remember it is
important to create the correct deal for the seller in order to buy
the property at your desired wholesale price.
Figure 6 shows an example of the Offer Generator screen with
Figure 6: Offer Generator