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| financing_leverage_spreadsheet_template.xls |
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ANALYZE FINANCIALS
CAP Rate
"The rate of return on net operating income considered acceptable for an investor and used to determine the capitalized value of a property."
10 CAP rate or above
(Possible high 8 or 9)
CAP Rate = Net Operating Income(NOI)/Total Cash Invested
Example
$7410 NOI - Annual
$47,000 – sales price
.157 or 15.7% CAP Rate
Example
Cost of Property - $70,000
Monthly Rents - $1,000
Annualized GOI or Gross Operating Income - $12,000
Multiply by .65 ($12,000 x .65)
NOTE: 35% of GOI expenses, vacancy, maintenance (Includes 20% expenses, 7.5% vacancy, 7.5% maintenance)
$7800 - NOI or Net Operating Income
CAP = NOI/Sales Price of Property
$7800/$70,000
11.14% CAP
Where do you get the money?
HELOC – Home Equity Line of CreditHard $$ lenders (see list)
Corporate Lines of Credit
www.CorporateCreditConcepts.com
Seller – Ask for seller to carry back a 2nd
Investment group
Joint ventures – construction group
