Well it has been a rediculiously busy past few weeks for me, but I do have some Updates. I have been working on some numbers for the house that I am trying to purchase from my fiance's family. Here is the work up of the numbers related to the house.

Some Updates
I came about this estimate through various comparables in the surrounding neighborhood. I also adjusted the price per square foot due to the variations in SQFT, and shape of the comparables. That is why my estimate is on the lower range when compared to the Cost/SQFT of the other properties.

Below is an estimate of what I believe it will cost to repair and renovate the house to todays standards.


This estimate is not including repairing the roof structure, which I believe will increase the cost substantially. This Estimate is also based on hiring all the work to be done. In really life I will try and do some of the stuff myself, especially the stuff that one doesn't need a permit for. The only things that I will have hired out are the things that requir a permit, anything that takes significant skill, etc.

Running the Numbers on a Property...


These are just some of the property evaluation tools that either I or my partner created after reading different books, and trying to work it out on Excel. My main goal was to come up with one Excel Worksheet that would evaluate the property numbers with the least amount of data that needed to be input. I never really found one that I like so far, but there are some very good ones.

Some Much Needed Advice...

Okay, I am in a little predicament, and I would greatly appreciate anyone's thoughts, insights, or advice on this matter. Here it goes...

My soon to be wife's parents own free her (my soon to be wife's) grandmothers house. It is a small 900 sq. ft. house that is in fairly poor condition. It desperately needs new roof framing along with new shingles and such. Along with that it needs updated electric, paint, flooring throughout, and a new tub (her grandmother needed a handicapped tub which unfortunately takes up the whole bathroom). My predicament is that they (her parents) are willing to sell us the house after the remodeling is done, fairly cheaply. But the major predicament is that they would like to keep the house in the family. Which would mean that we (my soon to be wife and I) would not be able to capture any of the equity in the house to place into another house or investment. I do not think it would be appropriate to sell the house back to them (her parents) for FMV if they sold it to us for less. I also do not want to be sneaky about it either. I would like everything out in the open to prevent possible problems.

Here are the numbers to the house...

Comps place similar houses at about $28 - $30,000
* I believe that after all the repairs and remodeling, it would be about $30 - $35,000
Current mortgage on the property is $0
Taxes About $1000 / year

Any advice would be greatly appreciated.
Attached is a basic floor plan of what it is currently like, and what I believe it should look like after repairs.




Again please give any thoughts or ideas.

Finally Pictures...


Hey look at this I finally figured out how to do pictures. It only took me a week to figure it out. Thanks to everyone who helped me with this. So here it is, the mighty 5-unit. I know it doesn't look like much, but it is actually very large, and well maintained. Sorry that I don't have any more pictures to put up of it, but as soon as I do I will post them.

Some Problems...

I have been spending the past few days trying to figure out this whole blog thing, and I can not seem to find any answers. So I am making a request out to other bloggers that may read this blog. If you have any idea on how to attach pictures to your blog, attach excel documents and/or charts to your blog, and maybe even some video to your blog as well. I would greatly appreciate some advice, or the name of a website that may give some meaningful information about these questions of mine. Thanks in advance.

Investing in Duplexes, Triplexes, and Quades

This is a decent book about buying investment properties, especially those that the title mentions. I particularly like the Valuation of Your Property Chapter (Chapter 8).

It goes into decent detail about a few different numbers one should look at when evaluating a deal to purchase. Some such numbers would be...

Gross Rent Multiplier (GRM) -
GRM = Purchase Price / Gross Scheduled Income
Ex. Property #1 Price: $245,000
Rents: $1,300 X 12 = $15,600/year
$245,000/$15,600 = 15.7 GRM
* One can also use this formula to estimate the cost of an investment property as well

Cash Return on Investment (ROI) -
ROI = Remaining cash after all expenses / initial investiment
Ex. $3,000 / $25,000 (Down Payment) = 12%

Margin -
Margin = 100 - operating expenses plus debt service / gross potential income
Ex. Gross Potential Income (100% occupancy) $31,000
Less Operating Expenses -$5,000
Net Income $26,000
Less Debt Service -$20,000
Cash Flow $6,000

Debt Service $20,000
Operating Expenses $5,000
Total Expenses $25,000
Accordingly: total exp $25,000 / gross potential income $31,000 = 80.6% break even
Thus, your margin is 19.4 % (100% - 80.6% = 19.4%)

Cap Rate -
Cap Rate= NOI / Purchase Price
Ex. $50,000 / $500,000 = .10 = 10%
*One can also use this formula to estimate the value of an investment property as well
Ex. NOI / Cap Rate
$50,000 / .09 = $555,555

Over all I believe that this is a very useful book. I believe that it is worth the read. Again its title is Investing in Duplexes, Triplexes, and Quad by Larry B. Loftis, Esq.