A bit perplexed by your response, the OP's question was pretty vague, I gave him some things to think about and hopfully start a dialog. You gave him nothing. It might be helpful if you would pick apart my response line by line, so I know where you think I went wrong to a vague question.
Hmm, many things I wannabe and I'm not, but I can live on the assets I have acquired and I'm happy, You? Mikek
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I expect that NT is wary of getting taken to the cleaners. Rightfully = so, given the expressed lack of sure knowledge about the value over time issues involved. NT needs expert help, far beyond my minor understanding of the issues and very little detail provided.
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I'm hesitant to get into details of the business situation, but the payment arrangement is no problem to go into. I thought I'd replied to a series of questions, but I'm not seeing that in the thread, so will re-respond.
The payments are agreed to be a fraction of the rental return on a house, so will increase year on year. The house is at risk of becoming a bit run down over the yaers, not badly so, just not updated as often as would be best. The level of payments is nothing to get excited about.
There's always a risk of the payer getting into financial trouble, but I plan to account for that separately, since I'm well placed to asses that risk, so want to ignore that one entirely for the moment.
Thanks for all your input so far.
NT
I just answered most of these above. Its not worth arranging a partial buyoff, kids arent involved, the payments arent likely to fall in value, management of the asset isnt that good, but tis fucntional.
NT
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Let me try to give you a shot at a rough framework:
We have owner "O" of property "P" with house "H" on it and Lesse "L" paying rent "R" (monthly?) on it.
If we use value 100,000 (money units) Mu for the value of the property with house on it the following factors become part of the issue: Property taxes on "P" with "H" on it, Utility costs and responsibility for "P" and "H", Insurance on "P" and "H", Incomes from uses of the property other than residence and any relationship to natural resources contained within or accessed by the property "P" as well as and in relation to rent "R".
Now we need to consider the changes (normal wear and tear, maintenance actions and changes to changing market) in value if house "H" versus time and change in value of property "P" versus time. Does rent "R" follow = the value of "P" only, "H" only, or "P" + "H"?
What is the amount of annual maintenance invested in the property and house?
What is the expected duration of the rental of "P" and "H" by "L"?
Is there a Mortgage (Mort) or similar lien on "P" and "H"? If so what is the monthly(?) payment?
With these inputs, and a spreadsheet you can work out some very rough numbers, which need to be conditioned by time value of money (several spreadsheet functions to do this are included, read very carefully what each one calculates and under what ASSUMPTIONS.
As a basic item of equivalence 10,000 Mu today at 4% annually is 400 Mu annually (33.33 Mu monthly) forever, or about 180 Mu monthly for 5 years.
HTH
?-)
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Yes its monthly rental income, yes its mortgaged. But the above outline concerns the landlord. I'm interested in the possibility of swapping the monthly cheque I receive from the landlord for a one off lump sum.
At the moment I'm leaning towards 12-13x before factoring in risk.
NT
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=A0Rightfully so,
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So you are Investor "I" holding the mortgage?
??-)
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