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Equations... Doing The Math...

th3monk3y profile photo
  • Wednesday, July 14, 2004 @ 08:04 PM EDT
  • 5 Comments

HI All,
I am a total newbie and would like to know a good equation for "doing the math" on both pre-foreclosure and foreclosing properties .. (i.e. sales, expenses, rehab costs, back payments on senior liens, taxes etc.) Is there a tried and true equation? I have searched through this forum and was suprised I haven't come across a previous post of this nature...
thanks in advance,
-Pablo

Comments(5)

  • no photo
    th3monk3y14th July, 2004

    is this a taboo question? grin

  • no photo
    Lufos14th July, 2004

    Nope not taboo, just impossible. The figures keep changing from deal to deal.

    You just go into your transaction and start to dig your cost. Each one will be different. Trustees fees are set by law but there are always additional costs. You have to watch them some Trustees are trying to break the law ie Atty fees etc. etc.

    You just check the advances that are being made and charged. You check your set costs and add them up. You might like to buy a HP 12C, read the little book there is no problem that it cannot solve. The declining balance problem. etc. etc. etc.

    If you are buy selling be sure you get all your costs in front. Escrow, title etc. etc.
    pro ration of taxes. Postings etc. etc.

    Sort of fun. Lucius

  • no photo
    th3monk3y14th July, 2004

    thanks Lufos,

    but you said exactly what i mean...
    "The figures keep changing from deal to deal"

    there should be some sort of equation with variables

    -particular property-
    fairmarket value = 345677
    total liens = 234563
    back taxes = 4567

    -psuedo equation-
    fairmarket value (-) total liens (-) back taxes = someValue (-) rehabCosts = What_I_shouldBid

    thanks,
    -Pablo

  • no photo
    groverm14th July, 2004

    I don't know if this is what your looking for but I use the following formulas.

    Bid amount < ((Appraised Value * .8) - expenses)
    Expenses might include repairs, taxes owed, liens, etc.
    the appraised value is the value of the property in good condition. You may also factor in how fast homes are selling in the area.

    For Rental properties
    the gross income needs to be at least twice as much as the payment I am paying on the purchase price. For instance if a property grosses $1000 my payment would be $500. I would be able to get a 30 yr mortgage at 6% for $80,000

    These are my personal equations, someone else may have better ones.

  • no photo
    th3monk3y14th July, 2004

    Thanks Guys,
    this is closer to what i was looking for ... Grovern, you appear to be a programmer as well ...heh

    any other equations? this is good stuff!!
    -Pablo

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