[includes/topmenu.htm]
HOME
Product Details
Case Studies
Free Demo
Purchase
Support
Links
F.A.Q.
Feedback
Awards

MKHG Real Estate
Investment Group LLC

 

 

 

Case 2: A bad deal

This is taken from Ebay listing #4302799132.  This is a two bedroom house in Charolette North Carolina currently listed at $88,900.  The unit currently has tenants that pay $550 per month.  There is no information about taxes so a low estimate is taken of around $500 a year.   The listing does not mention the need for repairs so we will exclude them from our calculation.

Lets see if the Real Estate Offer Generator can determine whether or not this is a good deal.

The first step is to determine what our Net Operating Income is by taking into account the rent, all the expenses including management, maintenance, and vacancy reserve as well as a return on our down payment and any required repairs.  The Net Operating Income is computed in the
Net Operating Income screen.

After the NOI has been computed and adjusted for the return on the down payment the next step is to see how much can be offered for this property so that we can still get our desired return and meet all expenses.  This calculation is done in the Offer Generator screen.


 

The most that can be offered for this property financing it for 30 years at 7.5% interest is only $54,042.12.  If the seller is presented with this offer and accepts it then you have turned a bad deal into a good one.  If the seller won't budge on the price then this is not a good deal and it is in your best interest to keep on looking.  

 

More Case Studies

 
bulletCase 1 - A good deal
bulletCase 3 - A creative deal

© 2004 MKHG Real Estate Investment Group LLC - All Rights Reserved