OfflineHello DG family. Here I am once again asking for your help, but this one will be short. I just wanted to know what is the best way to come up with the rental value of a property? Thanks in advance.
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Getting the numbers right
Posted on: Mon, 09/13/2010 - 07:04
When you are calculating the value of a rental property, I personally like to initially see if it follows the 1% rule. That rule states that what ever the properties sales price is 1% of that will be the payment PITI for an investor. I like to take this a step further and see if the home will cash flow on a 15 year note - PITI, positively of course! If it does not - NO DEAL!!! I hope that this information helps!
PITI - Principle, Interest, Taxes, Insurance - What a pity!
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Thank you very much, salden. That is very helpful. I definitely will use that strategy.
How well does this formula work? I've a couple rentals I'm evaluating, one of which doesn;t have any comps, and the other is... well both homes are cash cows every month, and the tenants pay on time. Is there anything you suggest in this case?
PITI - Principle, Interest, Taxes, Insurance - What a pity!