Chris:

I get "brain ache" trying to keep up with some of the creative financing guys. They bandy numbers about as if we should all just know them off the top of our heads. And never explain WHERE the numbers came from.

I find, if I know WHERE a number comes from and HOW that number is figured out, I can understand it and my brain does not begin to shut down in protest.

In the original post - the one with the fifteen year "table" - the value of the property is increasing at 5% per year. I just added 5% to each year's value to come up with the new value. The equity was that new value minus the $90,000 loan.

Simple "bush math" as I call it.

If I cannot do it on a normal calculator and need a financial calculator, I don't want to know. It's too complex. And complex things have a tendency to lack control.

I find, sitting down with a calculator and working through the numbers in presented stuff, lets me "own" the calculation method. Just reading it and trying to figure it creates brain strain.

A little while back we had a thread based on a real estate method that went like this:

Lease a property for six months. Pay the six months lease up front. And for doing so, only pay five months and get the sixth month for free. Then sub-lease it to a tenant for six months at a slight discount - the discount is so they will stay on.

The original lease payment (all five month's worth) was to be funded by investors at 12% - you owe them the money back plus 12%).

Your money came from the difference between what you owed the investor and what you took in in rent.

After all was said and done, you did a lot of work for little average payback. You got all your money up front - first and last month's rent - and after one year, you were basically managing the property for free.

The guy who presented the idea used numbers I could not figure out. I didn't know where he got his numbers from. And after asking for clarification - and getting it - I still don't have a clue.

I understand the concept. But not the numbers as they were presented. And what I don't understand I drop.

If you want to know WHERE a number came from in anything presented here and you can't figure it out yourself, ask. Once you know, you own it.

By the way... loan recalculations are figured by me using a free loan calculator I downloaded :o) I remember learning a loan formula at school, but it's easier to use software to figure it out.

Michael Ross