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Estimate Maximum Purchase Price

Our Max Purchase Price tool (available in the Max Price tab) lets you quickly estimate how much you can offer for a property in order to achieve your desired profitability using the following financial metrics: Cash on Cash Return on Investment (ROI), Annualized ROI, Project Profit and Internal Rate of Return (IRR).

Running the analysis is easy and only requires you to input 2 parameters for each table :

  • Mid-Value: represents the central value of the table
  • Interval: defines the increment / reduction in targeted profitability for that particular financial ratio

To run the analysis, simply click on the “Run Simulation” button at the top of the sheet.

The analysis will return a range of potential purchase prices that reflects the equivalent range of desired profitability.

In the exemple above, the table tells us that the max purchase price we can offer for the property is $394,900 in order to achieve a 25% Cash on Cash Return on Investment. This ROI would decrease to 20% if we increase our offering price to $403,300. Alternatively, should I target a ROI between 25% and 32.5%, I know that my max offering price should range from $382,700 to $394,900 approximately.

More generally, this tool is a great way to see how much changes in offering price impact your profitability and to identify a range within which your offer should land.

Results from all 4 tables are then consolidated into a summary graph which lets you quickly identify what price range matches the financial thresholds of multiple financial metrics.

Max Price Graph

Updated on May 30, 2021