No realestate formula is perfect, and all are
No realestate formula is perfect, and all are only as good as the figures [...] If the common rate is .08, meaning investors in the area expect only an 8% return, the value would be $550,000. If the gross income is $76,000 per year, and the expenses are $32,000, you have net income before debt-service of $44,000. You need to constantly change it to reflect interest rates, because a land might be profitable at 12 times rent when interest rates are low, but a money loser at eight times rent if the financing is expensive.
Morgan hill homes
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