- You are here:
- Home »
- Blog »
- Uncategorized »
- update Investors Checklist #102 (NH)
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)
-
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
About the Author Mike Hurney
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.
