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Real Estate Home
Preface

01. How It Started
02. First Buys
03. First Boners
04. Facts of Life
05. Dead Wood
06. Best Buy
07. Check First
08. Check Second
09. Unheated Properties
10. Time is Now
11. Still Good Buys?
12. Good Buys
13. Value Formula
14. Applied
15. The Net
16. Before Offer
17. Framing Offer
18. The Offer
19. After Acceptance
20. After Taking Title
21. Straightening Tenancies
22. New Tenants
23. Hold the Property
24. Tax Benefits
25. Sell Them
26. Tax Angles

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15. Figuring the Net

Having established through the Value Formula what we can pay for a building, we must determine whether this building will "carry itself" at this price. This process now becomes relatively simple, but is necessary before we can present a definite offer to the seller. Our Value Formula has produced a figure that is recommended but we cannot proceed until we have tested the figure for gross and net income. To be attractive, a property should show good prospects of paying all its carrying expense, all mortgage interest AND principal payments, and leave us net clear in hand, 25 to 33 per cent of the amount we originally invested (including any amounts we had to pay to put the property in fair condition).

This net in hand is called in the vernacular, MIF or "money in fist." From this MIF amount, we must occasionally stand a loss through vacancy, which we will soon learn to hold to a tiny minimum, and we must contribute to the repair fund when it is short of the sum needed to make a major repair such as a new roof or heater. However, this happens very seldom.

Here is the form for determining the NET or MIF.
Total yearly rents $______
Payouts
Taxes
Fuel
Other utilities supplied (such as gas, light, etc.)
Janitor cost
Insurance
Water
Total annual mortgage payments, including Interest and Principal on all mortgages
Deduct payouts from total rents. Balance is Net in Hand (MIF) as would be carrying them in accordance with our offer.

Total Payouts $_______
Net in Hand $_______

CALCULATING MORTGAGE PAYMENTS

At this time we should learn how to use a mortgage payment calculator. Practically every bank in the United States and Canada uses the flat payment plan. You will meet it in all the mortgages you undertake.

Whenever you want to buy with a second mortgage you will refer to your calculator to determine precisely the flat amount you pay each month, which will include interest and principal payment and will automatically pay off the obligation in the prescribed number of years.

Similarly, when you contemplate making an offer for a building, you will be setting forth that you will buy it, providing you can obtain:

a certain amount of mortgage at
a certain per cent of interest for
a certain number of years.

These are the three terms of any loan that you need to know in order to determine quickly the payments per month.

If, for instance, you plan to offer $12,500 for the building with $1,500 down, providing you can obtain a mortgage loan of $11,000 at 6% for 20 years, you will want to know how much you will be paying out each month to determine the MIF. You can look it up in seconds. The payment is $78.81 per month. Now it is multiplied by 12 to determine the gross amount per year you will be paying out to the bank for interest and principal.

The calculator booklets are for sale at most law stationers and some banks give them to customers free.* If there is no near supplier, the mortgage officer of the bank will refer you to one.

Here is a chart covering most of the amounts and percentages that you will require. If the loan is an uneven amount like 12,300, you first find the payment for $12,000 and add the payment for $300 and the total will be the monthly payment for $12,300.

* Or send $1,00 for complete booklet to: Realforms, P.O. Box I, Brookline Mass.02146

MONTHLY PAYMENT NECESSARY TO AMORTIZE A LOAN
6% 6%

Term	10	11	12	13	14	15	16	17
Amount	Years	Years	Years	Years	Years	Years	Years	Years
$5600	62.18	58.06	54.65	51.79	49.35	47.26	45.45	43.86
5700	63.29	59.10	55.63	52.71	50.24	48.10	46.26	44.64
5S00	64.40	60.13	56.60	53.64	51.12	48.95	47.07	45.42
5900	65.51	61.17	57.58	54.56	52.00	49.79	47.88	46.21
6000	66.62	62.21	58.56	55.49	52.88	50.64	48.69	46.99
6100	67.73	63.24	59.53	56.41	53.76	51.48	49.50	47.77
6200	68.84	64.28	60.51	57.34	54.64	52.32	50.31	48.56
6300	69.95	65.32	61.48	58.26	55.52	53.17	51.13	49.34
6400	71.06	66.35	62.46	59.19	56.40	54.01	51.94	50.12
6500	72.17	67.39	63.44	60.11	57.29	54.86	52.75	50.91
6600	73.28	68.43	64.41	61.04	58.17	55.70	53.56	51.69
6700	74.39	69.46	65.39	61.98	59.05	56.54	54.37	52.47
6800	75.50	70.50	66.36	62.89	59.93	57.39	55.18	53.26

6900	76.61	71.54	67.34	63.81	60.81	58.23	55.99	54.04
7000	77.72	72.57	68.31	64.74	61.69	59.07	56.81	54.82
7100	78.83	73.61	69.29	65.66	62.57	59.92	57.62	55.61
7200	79.94	74.65	70.27	66.59	63.45	60.76	58.43	56.39
7300	81.05	75.68	71.24	67.51	64.34	61.61	59.24	57.17
7400	82.16	76.72	72.22	68.43	65.22	62.45	60.05	57.95
7500	83.27	77.76	73.19	69.36	66.10	63.29	60.86	58.74
7600	84.38	78.79	74.17	70.28	66.98	64.14	61.67	59.52
7700	85.49	79.83	75.15	71.21	67.86	64.98	62.49	60.30
7800	86.60	80.87	76.12	72.13	68.74	65.83	63.30	61.09
7900	87.71	81.90	77.10	73.06	69.62	66.67	64.11	61.87
8000	88.82	82.94	78.07	73.98	70.50	67.51	64.92	62.65

8100	89.93	83.98	79.05	74.91	71.39	68.36	65.73	63.44
8200	91.04	85.01	80.02	75.83	72.27	69.20	66.54	64.22
8300	92.15	86.05	81.00	76.76	73.15	70.05	67.35	65.00
8400	93.26	87.09	81.98	77.68	74.03	70.89	68.17	65.79
8500	94.37	88.12	82.95	78.61	74.91	71.73	68.98	66.57
8600	95.48	89.16	83.93	79.53	75.79	72.58	69.79	67.35
8700	96.59	90.20	84.90	80.46	76.67	73.42	70.60	68.13
8800	97.70	91.23	85.88	81.38	77.55	74.26	71.41	68.92
8900	98.81	92.27	86.86	82.31	78.43	75.11	72.22	69.70
9000	99.92	93.31	87.83	83.23	79.32	75.95	73.03	70.48
9100	101.03	94.35	88.81	84.15	80.20	76.80	73.85	71.27
9200	102.14	95.38	89.78	85.08	81.08	77.64	74.66	72.05
9300	103.25	96.42	90.76	86.00	81.96	78.48	75.47	72.83

9400	104.36	97.46	91.73	86.93	82.84	79.33	76.28	73. 62
9500	105.47	98.49	92.71	87.85	83.72	80.17	77.09	74. 40
9600	106.58	99.53	93.69	88.78	84.60	81.02	77.90	75. 18
9700	107.69	100.57	94.66	89.70	85.48	81.86	78.71	75. 97
9800	108.81	101.60	95.64	90.63	86.37	82.70	79.53	76. 75
9900	109.92	102.64	96.61	91.55	87.25	83.55	80.34	77. 53
10000	111.03	103.68	97.59	92.48	88.13	84.39	81.15	78. 32
11000	122.13	114.04	107.35	101.72	96.94	92.83	89.26	86. 15
12000	133.23	124.41	117.11	110.97	105.75	101.27	97.38	93. 98
13000	144.33	134.78	126.87	120.22	114.57	109.71	105.49	101. 81
14000	155.43	145.14	136.62	129.47	123.38	118.14	113.61	109. 64
15000	166.54	155.51	146.38	138.71	132.19	126.58	121.72	117. 47
16000	177.64	165.88	156.14	147.96	141.00	135.02	129.84	125. 30
17000	188.74	176.24	165.90	157.21	149.82	143.46	137.95	133. 13
18000	199.84	186.61	175.66	166.46	158.63	151.90	146.06	140. 96
19000	210.94	196.98	185.42	175.70	167.4	160.3	154.18	148. 79
19000	210.94	196.98	185.42	175.70	167.44	160.34	154.18	148. 79

20000

222.05

207.35

195.18

184.95

176.25

168.78

162.29

156.
63

MONTHLY PAYMENT NECESSARY TO AMORTIZE A LOAN
6% 6%

Term	18	19	20	21	22	23	24	25
Amount	Years	Years	Years	Years	Years	Years	Years	Year?
$100	.76	.74	.72	.70	.69	.67	.66	.65
200	1.52	1.48	1.44	1.40	1.37	1.34	1.32	1.29
300	2.28	2.21	2.15	2.10	2.05	2.01	1.97	1.94
400	3.04	2.95	2.87	2.80	2.74	2.68	2.63	2.58
500	3.80	3.69	3.59	3.50	3.42	3.35	3.28	3.23
600	4.55	4.42	4.30	4.20	4.10	4.02	3.94	3.87
700	5.31	5.16	5.02	4.90	4.79	4.69	4.60	4.52
800	6.07	5.89	5.74	5.60	5.47	5.36	5.25	5.16
900	6.83	6.63	6.45	6.29	6.15	6.02	5.91	5.80
1000	7.59	7.37	7.17	6.99	6.84	6.69	6.56	6.45
1100	8.34	8.10	7.89	7.69	7.52	7.36	7.22	7.09
1200	9.10	8.84	8.60	8.39	8.20	8.03	7.88	7.74
1300	9.86	9.57	9.32	9.09	8.88	8.70	8.53	8.38
1400	10.62	10.31	10.04	9.79	9.57	9.37	9.19	9.03
1500	11.38	11.05	10.75	10.49	10.25	10.04	9.84	9.67
1600	12.14	11.78	11.47	11.19	10.93	10.71	10.50	10.31
1700	12.89	12.52	12.18	11.89	11.62	11.38	11.16	10.96
1800	13.65	13.25	12.90	12.58	12.30	12.04	11.81	11.60
1900	14.41	13.99	13.62	13.28	12.98	12.71	12.47	12.25
2000	15.17	14.73	14.33	13.98	13.67	13.38	13.12	12.89
2100	15.93	15.46	15.05	14.68	14.35	14.05	13.78	13.54
2200	16.68	16.20	15.77	15.38	15.03	14.72	14.44	14.18
2300	17.44	16.93	16.48	16.08	15.72	15.39	15.09	14.82
2400	18.20	17.67	17.20	16.78	16.40	16.06	15.75	15.47
2500	18.96	18.41	17.92	17.48	17.08	16.73	16.40	16.11
2600	19.72	19.14	18.63	18.18	17.76	17.40	17.06	16.76
2700	20.48	19.88	19.35	18.87	18.45	18.06	17.72	17.40
2800	21.23	20.62	20.07	19.57	19.13	18.73	18.37	18.05
2900	21.99	21.35	20.78	20.27	19.81	19.40	19.03	18.69
3000	22.75	22.09	21.50	20.97	20.50	20.07	19.68	19.33
3100	23.51	22.82	22.21	21.67	21.18	20.74	20.34	19.98
3200	24.27	23.56	22.93	22.37	21.86	21.41	21.00	20.62
3300	25.02	24.30	23.65	23.07	22.55	22.08	21.65	21.27
3400	25.78	25.03	24.36	23.77	23.23	22.75	22.31	21.91
3500	26.54	25.77	25.08	24.46	23.91	23.41	22.96	22.56
3600	27.30	26.50	25.80	25.16	24.60	24.08	23.62	23.20
3700	28.06	27.24	26.51	25.86	25.28	24.75	24.28	23.84
3800	28.82	27.98	27.23	26.56	25.96	25.42	24.93	24.49
3900	29.57	28.71	27.95	27.26	26.64	26.09	25.59	25.13
4000	30.33	29.45	28.66	27.96	27.33	26.76	26.24	25.78
4100	31.09	30.18	29.38	28.66	28.01	27.43	26.90	26.42
4200	31.85	30.92	30.10	29.36	28.69	28.10	27.56	27.07
4300	32.61	31.66	30.81	30.06	29.38	28.77	28.21	27.71
4400	33.36	32.39	31.53	30.75	30.06	29.43	28.87	28.35
4500	34.12	33.13	32.24	31.45	30.74	30.10	29.52	29.00
4600	34.88	33.86	32.96	32.15	31.43	30.77	30.18	29.64
4700	35.64	34.60	33.68	32.85	32.11	31.44	30.84	30.29
4800	36.40	35.34	34.39	33.55	32.79	32.11	31.49	30.93
4900	37.15	36.07	35.11	34.25	33.48	32.78	32.15	31.58
5000	37.91	36.81	35.83	34.95	34.16	33.45	32.80	32.22
5100	38.67	37.55	36.54	35.65	34.84	34.12	33.46	32.86
5200	39.43	38.28	37.26	36.35	35.52	34.79	34.12	33.51
5300	40.19	39.02	37.98	37.04	36.21	35.45	34.77	34.15
5400	40.95	39.75	38.69	37.74	36.89	36.12	35.43	34.80
5500	41.70	40.49	39.41	38.44	37.57	36.79	36.08	35.44

(continued on following page)

MONTHLY PAYMENT NECESSARY TO AMORTIZE A LOAN
6% 6%

Term	18	19	20	21	22	23	24	25
Am- ount	Years	Years	Years	Years	Years	Years	Years	Year?
5600	42.46	41.23	40.13	39.14	38.26	37.46	36.74	36. 09
5700	43.22	41.96	40.84	39.84	38.94	38.13	37.40	36. 73
5800	43.98	42.70	41.56	40.54	39.62	38.80	38.05	37. 37
5900	44.74	43.43	42.27	41.24	40.31	39.47	38.71	38. 02
6000	45.49	44.17	42.99	41.94	40.99	40.14	39.36	38. 66
6100	46.25	44.91	43.71	42.64	41.67	40.80	40.02	39. 31
6200	47.01	45.64	44.42	43.33	42.36	41.47	40.68	39. 95
6300	47.77	46.38	45.14	44.03	43.04	42.14	41.33	40. 60
6400	48.53	47.11	45.86	44.73	43.72	42.81	41.99	41. 24
6500	49.29	47.85	46.57	45.43	44.40	43.48	42.64	41. 88
6609	50.04	48.59	47.29	46.13	45.09	44.15	43.30	42. 53
6700	50.80	49.32	48.01	46.83	45.77	44.82	43.96	43. 17
6800	51.56	50.06	48.72	47.53	46.45	45.49	44.61	43. 82
6900	52.32	50.79	49.44	48.23	47.14	46.16	45.27	44. 46
7000	53.08	51.53	50.16	48.92	47.82	46.82	45.92	45. 11
7100	53.83	52.27	50.87	49.62	48.50	47.49	46.58	45. 75
7200	54.59	53.00	51.59	50.32	49.19	48.16	47.24	46. 39
7300	55.35	53.74	52.30	51.02	49.87	48.83	47.89	47. 04
7400	56.11	54.48	53.02	51.72	50.55	49.50	48.55	47. 68
7500	56.87	55.21	53.74	52.42	51.24	50.17	49.20	48. 33
7600	57.63	55.95	54.45	53.12	51.92	50.84	49.86	48. 97
7700	58.38	56.68	55.17	53.82	52.60	51.51	50.52	49. 62
7800	59.14	57.42	55.89	54.52	53.28	52.18	51.17	50. 26
7900	59.90	58.16	56.60	55.21	53.97	52.84	51.83	50. 90
8000	60.66	58.89	57.32	55.91	54.65	53.51	52.48	51. 55
8100	61.42	59.63	58.04	56.61	55.33	54.18	53.14	52. 19
8200	62.17	60.36	58.75	57.31	56.02	54.85	53.80	52. 84
8300	62.93	61.10	59.47	58.01	56.70	55.52	54.45	53. 48
8400	63.69	61.84	60.19	58.71	57.38	56.19	55.11	54. 13
8380	64.45	62.57	60.90	59.41	58.07	56.86	55.76	54. 7 7
$8600	65.21	63.31	61.62	60.11	58.75	57.53	56.42	55. 41
8700	65.97	64.04	62.33	60.81	59.43	58.19	57.08	56. 06
8800	66.72	64.78	63.05	61.50	60.12	58.86	57.73	56. 70
8900	67.48