I Have A Property Under Contract But....
I have a property under contract an a buyer, but need help thourgh the rest of the steps. book dont realy get you ready for the real deal.
[ Edited by tomos on Date 11/23/2006 ]
[ Edited by tomos on Date 11/23/2006 ]
I just made it through my first real estate deal. Mine was a single family with a significant amount of rehab. Ended up renting because the market here is soft.
what is your deal like?
what work needs to be done?
are you going to resell?
are you going to rent?
Debt Service Coverage Ratio
Net Operating income before debt service / debt payment.
The resulting Ratio must be over 1.0 in order for the property to have post-mortgage positive cash flow. Most lenders require at least 1.2 many insist on 1.25. Obviously the higher this number the lower the leverage and the lower the debt risk. Also the lower the ROI because there is more equity in the deal.
Thank you.