update Investors Checklist #102 (NH)

Property Analysis

Here’s an example of some Property analysis Guidelines, make sure you’re comfortable with the Guidelines YOU use! Mike

1.Price/Square Foot

2.Capitalization Rate

Cap Rate = Net Operating Income/Purchase Price (Value)

*NOI

Gross Rental Income (month)

  • -Vacancy
  • -Real Estate tax
  • -Insurance
  • -Maintenance
  • -Condo/HOA fee

NO PI!

NOI/month x 12 _____________NOI Annually

NOI/Purchase Price (Value) = Cap

3.Rate of Return

Net Income/Investment = RoR

4.Income Approach GRM

Monthly Rent/Value = GRM

285 Lynn Shore Drive Apartment #512, 01902 3 Rooms, 1 Bedroom, 1 F Bath 602 SF (April 17, 2020)

(7%, 30yr Fixed, 20% down = $984.12/month PI)

  1. Price/Square Foot

$184,900. List price/602. SF = $307/SF

There were 26 Sold Listings within 0.50 mile radius & within the past 6 months. $190-392k Average 903SF Average Sale $246,354.

$285./SF

2. Capitalization Rate

Cap rate = Net Income/Value

$2500. monthly rent

-$453. Condo/HOA fee

-$169.62 RE Tax

-$250. Vacancy & Maintenance

$1627.38 NOI/month x 12 = $19,528.56 NOI/year

$19,528.56/$184,900. = .106, 10.6 Cap

(Lower the Cap, Lower the risk, Higher the Cap, Higher the risk)

3. Rate of Return RoR

RoR = Net Income/Investment

$19,528.56/$36,980.00 (20% of $184,900. down payment) = 52.8% Rate of Return.

4. Income Approach – GRM

$2500/month/$184,900. purchase = 0.014 1.4 Gross Rent Multiplier. 1% is good in our area!

5. I like the Debt Service Ratio for quick numbers. It allows me to make Counter offers on the Spot! which is VERY Importante’!

Rent/Debt Service

$2500. rent/$984.12 PI +$435.Condo fee + $169.62 RE tax = 1.56 Quickly shows a bank you can make payments every month, collecting that rent!

 

This is also the Guide we use in Lesson #5 “Make an Offer” of Mike Hurney’s course “How to Become a Real Estate Investor in 12 Simple Lessons”

Last –  don’t forget our “4 Corners of the Box” Mortgage Guidelines

Reserves – 3 months PITI

High FICO credit score

Low LTV Loan to Value

Good DTI Debt to Income ratio

Get out there looking and make your own Good Luck! Mike

 

Weekly update April 17, 2020 for NewHampshireREIA.org

Weekly Update 4/17/2020

Congress Missed a Chance to Protect Rentals. We Can’t Let it Happen Again!

All of us at National REIA hope you and your families are well. The COVID-19 outbreak is an enormous challenge to our communities and our nation. While Congress enacted far-reaching measures in response to the crisis, more needs to be done. Congress needs to pass additional relief measures for the rental housing industry and address a number of concerns in the recently passed CARES Act!

Consumer Price Index Down in March

The U.S. Bureau of Labor Statistics is reporting that the Consumer Price Index for All Urban Consumers (CPI-U) declined 0.4% in March, which BLS says was the largest monthly decline since January 2015.

Property Taxes on Single Family Homes Surpasses $306 Billion in 2019

According to ATTOM Data’s 2019 property tax analysis, total property taxes levied on single family homes in 2019 totaled $306.4 billion, up 1% from 2018. This figure averages to about $3,561 per home and is an effective tax rate of 1.14%.

Tarek El Moussa Says Flipping is Happening but it’s a lot More Challenging!

On a recent episode of CNBC’s Power Lunch, HGTV’s Tarek El Moussa said that flipping is in fact happening, but “it’s just a lot more challenging.”  The reality TV star of Flip or Flop joined the panel to discuss the state of the real estate industry amid the Coronavirus pandemic.

Home Prices Were Heating Up Prior to the Coronavirus Outbreak

According to CoreLogic, home prices across the nation were beginning to “heat up” just prior to the Coronavirus outbreak and subsequent national emergency. Their latest CoreLogic Home Price Index (HPI) Report said that prices increased 4.1% year over year and has been increasing on a year-over-year basis since, 2012.

COVID-19 Impact on Short-Term Rentals 

Do you have any short-term rental investments that have been affected by the Coronavirus? On a recent episode of Real Estate News for Investors, Kathy Fettke discusses the impact the pandemic has had on the short-term rental industry as well as what Airbnb has been doing to address it.

Redfin Sees Interest in Rural Areas & Small Towns Spike During Pandemic

Redfin says that small towns and rural areas may be set to boom in the wake of the Coronavirus pandemic as homebuyer interest in America’s less populous areas saw a surge in March.

Mortgage Loans in Forbearance Increases

The Mortgage Bankers Association is reporting an increase in requests for mortgage forbearance. This data is from the MBA’s latest Forbearance and Call Volume Survey which reported that the total number of loans in forbearance recently jumped from 2.73% to 3.74%.

April is Fair Housing Month

Infographic: April is Fair Housing Month, as designated by the U.S. Dept. of Housing and Urban Development. HUD says that any form of discrimination makes it difficult to create the nation our forefathers envisioned.

update April 3,2020 NewHampshireREIA.org

update April 3,2020 NewHampshireREIA.org

Congress Passes Historic Trillion Dollar Stimulus Package

In late March Congress passed (and the President signed) a historic $2 trillion economic-rescue package (CARES Act) for individuals and businesses affected by the Coronavirus pandemic. CNBC’s Kelly Evans interviewed the Wall Street Journal’s executive Washington editor, Gerald Seib about the bill and its implications for helping America through this crisis. Click here to read more.

Unemployment Claims Spike off the Charts

A recent “chart of the week” from the Mortgage Bankers Association vividly illustrates the U.S. Department of Labor unemployment statistics from mid-March: jobless claims spiked to over 3.3 million! Click here to read more.

FHFA Index Says U.S Home Prices Up 5.2% Year-Over-Year 

According to the latest Federal Housing Finance Agency’s (FHFA) House Price Index (HPI), U.S. house prices were up 0.3% in January, 2020. In addition, they report that home prices were up 5.2% from January 2019 to January 2020. Click here to read more.

Pending Home Sales Up 2.4% in February 

The National Association of Realtors is reporting that pending home sales were up 2.4% in February with the NAR’s Pending Home Sales Index (a forward-looking indicator based on contract signings) increasing to 111.5. Click here to read more.

FBI Sees Rise in Coronavirus Fraud Schemes

We have had several posts about the dangers of cybercrime over the past few years. Recently, the FBI said they have seen an uptick in the number of scams & methods for cyber-criminals to steal your money, personal information or both during the current Coronavirus pandemic. Click here to read more.

How Does a Crisis Affect Your Investment?

Managing your properties during any crisis is a challenge, let alone the current Coronavirus pandemic we’re experiencing. On a recent episode of the Rent Perfect Podcast, David Pickron talks with longtime property manager and seasoned housing provider Anne McCawley about how to manage your properties during a time of crisis. Anne gives great insight on how to plan for and maneuver through these challenging times. Click here to read more.

Negative Interest Hit US Treasury Bills

In late March yields on both the 1-month and 3-month U.S. Treasury Bills entered negative territory – the first time in almost 5 years that this has happened. Click here to read more.

ABODO Says Americans Worried About Making Rent  

National apartment listing site ABODO recently reported that the median nationwide rent price for one-bedroom units in April was $1,088 with two-bedroom units coming in at $1,354. However they caution that Americans are worried about paying the rent during the ongoing Coronavirus pandemic. Click here to read more.

S&P CoreLogic Case-Shiller Index Up 3.8%

According to the latest S&P CoreLogic Case-Shiller Indices, covering all nine U.S. census divisions, the rate of home price increases reported a 3.9% annual gain in January.  Their 10-City Composite annual increase came in at 2.6% and the 20-City Composite posted a 3.1% year-over-year gain. Click here to read more.

Breaking Down the $2 Trillion Coronavirus Stimulus Package 

Infographic: In late March, the U.S. Congress passed and President Trump signed the $2 trillion Coronavirus relief bill known as the CARES Act. The folks over at howmuch.net recently put together a simple chart outlining where this money is going and how it will help America. Click here to read more.

update Mar 27,2020 NewHampshireREIA.org

Weekly update March 27, 2020 for NewHampshireREIA.org

National REIA Statement on COVID-19 and Housing Providers

The National Real Estate Investors Association, its Chapters and Affiliates, and over 40,000 members, encourage all residents who are in financial distress to proactively contact the owner or manager of their home prior to April 1st or the date upon which rent is due.

News for Investors – Real Estate News Brief 

In her most recent weekly Real Estate News News Brief, Kathy Fettke reminds us that we’re in an “unprecedented situation right now” as the Coronavirus threatens the health & safety of everyone in the world. In her brief, she covers several topics including the coronavirus, a tax day reprieve, mortgage moratoriums and stay-at-home restrictions.

Essential vs Non-Essential Businesses During Shelter in Place Orders 

There has been a lot of justified discussion (in light of the Coronavirus pandemic) about what constitutes an “essential” or “non-essential” business during a “shelter in place” order. While we most certainly know that in most cases, the provision of rental housing is an essential function – especially when it comes to the health & safety of residents. That being said, The National Law Review recently published an article about the issue and while they say the answers are not always clear or consistent, there are steps you can take to be prepared if and/or when your local jurisdiction issues a “shelter in place” order.

Zillow Pauses Home Buying in Response to Market Uncertainty

Zillow recently announced that it will “pause” home buying in the markets where Zillow Offers operates. They said they’re responding to local public health orders related to the Coronavirus and their desire protect the health & safety of their employees, customers and partners.

Housing Starts & Building Permits Down Slightly

The U.S. government is reporting that privately-owned housing starts in February were at a seasonally adjusted annual rate of 1,464,000, which is 5.5% below January’s revised number. However, it was 13.8% higher than one year ago.

Existing-Home Sales Up 6.5% in February

The National Association of Realtors is reporting that existing home sales were up 6.5% in February which they say that while encouraging, it is not reflective of the current economic turmoil brought on by the Coronavirus.

New Home Sales in February Up 14% from 2019

The U.S. Government is reporting that sales of new single-family houses in February, 2020 were at a seasonally adjusted annual rate of 765k, which is 4.4% lower than January’s revised rate, but is 14.8% higher than one year ago.

RENTcafé Says Rents are Up 3.2% Year-Over-Year

RENTcafé says while the market will likely be affected by the Coronavirus pandemic, the national average rent in February was 1,468, up 3.2% from one year ago.

Foreclosure Starts Hit Lowest Level on Record in February

Foreclosure starts hit their lowest level on record in February, this according to Black Knight’s latest “first look” report. Foreclosure starts fell 25% in January hitting their lowest level on record since Black Knight began reporting it in January 2000.

U.S. Ranks First in the World in Health Security

Infographic: With the Coronavirus pandemic affecting our nation & world, it was reassuring to come across this recent infographic from Visual Capitalist pulling data from the 2019 Global Health Security Index. It ranked 195 countries on health security with the United States ranking first in the world.

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