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)
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
(7%, 30yr Fixed, 20% down = $984.12/month PI)
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
$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
(Lower the Cap, Lower the risk, Higher the Cap, Higher the risk)
Rent/Debt Service
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”
Reserves – 3 months PITI
High FICO credit score
Low LTV Loan to Value
Good DTI Debt to Income ratio
Mike Hurney is the Founder and Director of MassRealEstate.net, an Association of Contractors, Investors and Landlords. He is the Author and Coach of the popular Course "How to Become a Real Estate Investor in 12 Easy Lessons" which Trains and Guides Beginners or Sharpens and Challenges the Skill of Advanced Investors. Mike is a Successful Real Estate Investor, Rehabber and Landlord. He's also a Licensed Mortgage Broker and Construction Supervisor.