Investors Checklist #102
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!
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 looking out there and make your own Good Luck! Mike
‘1.Price/Square Foot
$565,000./2704 SF = $209/SF
2.Capitalization Rate
$1800 x 3 x 12 =$64,800.
RE Tax = ($4756.)
Insurance = ($1800.)
Vacancy 5% = ($3240.)
Maintenance = ($3240.)
NOI $51764.
Cap = Net Income/Value
$51,764./$565,000 = 0.092 9.2 Cap Rate
3.Rate of Return
RoR = Net Income/Investment
$51,764./$113,000. (20% down) = 45.8% Rate of Return
4.Income Approach GRM
Value/Monthly Rent = GRM
$565,000./$5600. = 100.89
OR
$5,600./$565,000. = 1% WooHoo!!
By the Bye…
Rents $64,800.
Expenses ($13,036.)
NOI $51,764.
MT ($30,796.) 80%, 5.5%, 30Yr $2,566.46/month
Cash Flow $20,967.
Property used in the Example:
MLS # 72398682 – Sold
Multi Family – 3 Family
15 Dodge St
Beverly, MA: North Beverly, 01915-1712
Essex County
List Price: $569,900
Sale Price: $565,000
Color: GREY
Total Floors: 2 Total Rooms: 13
Total Units: 3 Total Bedrooms: 6
Total Rent: $0 Total Bathrooms: 3f 1h
Grade School: Total Fireplaces: 2
Middle School:
High School:
Directions: Route 1A Near 128
Remarks
Great Value for this charming North Beverly three family , 5 room three bedroom owners unit with Modern Country Kitchen, Featuring granite counters and stainless steel appliances, Beautiful hardwood floors, Formal dining room , 1 and 1/2 baths , Plus 4 room 1 bedroom unit and 3 room 1 bedroom unit, Close to Highway and Downtown, Large lot with fenced in yard and plenty of parking. Separate Utilities
Property Information
Approx. Living Area: 2,704 Sq. Ft. Approx. Acres: 0.2 (8,875 Sq. Ft.) Garage Spaces: 0
Living Area Includes: Heat/Cool Zones: Parking Spaces: 6 Off-Street, Improved Driveway, Stone/Gravel
Living Area Source: Public Record Heat/Cool Units: 3 Approx. Street Frontage: 50 Ft.
Living Area Disclosures:
Disclosures:
Annual Expenses
Heating: Repair & Maintenance: Management: Gross Income:
Gas: Trash Removal: Miscellaneous: Gross Expenses:
Electricity: Sewer: Ann. Prop. Oper. Data: No Net Income:
Water: Insurance: Annual Expense Source:
Unit Descriptions
Unit #1
Rooms: 3 Bedrooms: 1 Bathrooms: 1f 0h Fireplaces: 0 Levels: 1 Floor: 1 Rent: 0 Lease: No
Rooms: Living Room, Kitchen
Appliances: Range
Unit #2
Rooms: 4 Bedrooms: 2 Bathrooms: 1f 0h Fireplaces: 0 Levels: 1 Floor: 1 Rent: 0 Lease: No
Rooms: Living Room, Kitchen
Appliances: Range
Unit #3
Rooms: 6 Bedrooms: 3 Bathrooms: 1f 1h Fireplaces: 1 Levels: 1 Floor: 2 Rent: 0 Lease: No
Rooms: Living Room, Dining Room, Kitchen
Appliances: Range
Features
Area Amenities: Public Transportation, Shopping, Medical Facility, Highway Access, House of Worship, Public School
Basement: Yes Full, Interior Access, Bulkhead
Beach: No
Construction: Frame
Electric: Circuit Breakers, 60 Amps/Less
Energy Features: Insulated Windows
Exterior: Wood
Exterior Features: Porch
Flooring: Wood, Tile, Vinyl, Wall to Wall Carpet, Varies Per Unit
Foundation Size: 26*55
Foundation Description: Fieldstone
Hot Water: Natural Gas, Tank
Lot Description: Level
Road Type: Public
Roof Material: Asphalt/Fiberglass Shingles
Sewer Utilities: City/Town Sewer
Terms: Seller W/Participate
Utility Connections: Varies per Unit
Water Utilities: City/Town Water
Waterfront: No
Water View: No
Other Property Info
Adult Community: No
Disclosure Declaration: No
Exclusions:
Facing Direction: West
Lead Paint: Unknown
UFFI: No Warranty Features: No
Year Built: 1880 Source: Public Record
Year Built Description: Approximate
Year Round:
Short Sale w/Lndr. App. Req: No
Lender Owned: No
Tax Information
Pin #: M:0054 B:0011 L:
Assessed: $349,700
Tax: $4,756 Tax Year: 2018
Book: 0 Page: 0
Cert:
Zoning Code: R10
Map: Block: Lot:
Market Information
Listing Date: 9/19/2018 Listing Market Time: MLS# has been on for 91 day(s)
Days on Market: Property has been on the market for a total of 91 day(s) Office Market Time: Office has listed this property for 91 day(s)
Expiration Date: Cash Paid for Upgrades:
Original Price: $589,900 Seller Concessions at Closing: $5,000
Off Market Date: 12/18/2018 Financing: FHA
Sale Date: 1/16/2019
Sale Price: $565,000
Offer Date: 12/4/2018 Days to Offer: 76
