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 Investing in a rental property can be a very rewarding experience with low cash investment and good long-term equity builds up. Even positive cash flow can be generated over time with low down. Investing can also be a bit scary for a first the time investor with concerns of vacancy and repairs in the forefront. Down payments of 5% are realistic provided you have a high credit score (over 700 fico). If your score is lower than 700 then the down payment increases and or an interest rate increases is needed. Have more questions just e-mail or call Darrin 208-287-0400 Cash Flow: To obtain cash flow in today’s market one of two programs will fit your needs.
Have more questions just e-mail or call Darrin 208-287-0400 Renter stability: One item that many investors overlook is renter stability, or turnover. If you are constantly turning over tenants you are expending time, energy and money re-renting the property. The best rent to stability ratio for single-family homes can be found in the 150-225K price range with select oportunities in the $235-$275K price range. This would be a single-family home in nice area with good tenant retention and appreciation. Multi-family homes typically have a different stability ratio. I have found at the typical apartment, a tenant is there 8 months, while the average single-family home tenant is there nearly twice as long. The upside to multi-unit investment is that if a unit is vacant you are not 100% vacant. Have more questions just e-mail or call Darrin 208-287-0400
Boise area prices: Prices vary in the Boise area from $100,000 on up for single family homes. Multi family properties are also available and the financing is similar with duplexes, starting at about $165,000, and 4 plexes in the mid 300’s and new 4 plexes in the high 300's to low 400's. The scenarios of each investor are uniquely different and are impossible for me to review all the topics here. If you think this is something you would be interested in talking about please give me a call. I would be happy to review the different options that are available. Have more questions just e-mail or call Darrin 208-287-0400 Are you in a 1031 Tax deferred exchange? Check out FAQ's.  Low Down Payment: 0-19% down Medium Down Payment: 20% or greater. Gross Rent Multiplier: The Gross Rent Multiplier (GRM) formula for value is as follows: Value = Annual Gross Income X Gross Rent Multiplier For Example: $102,600 = $11,400 (Potential Annual Gross Income) X 9 (Gross Rent Multiplier) The Gross Rent Multiplier or GRM is a ratio that is used to quickly estimate the value of rental properties. Just two pieces of information are required to calculate GRM for a property, the sale price and the total gross rents. The higher the GRM, the better the return. I use the GRM to compare sales history to different properties that I may recommend to a client. For instance, if there are 6 comparable sales with GRM’s of 8.75 – 9.25. That will quickly tell me the range of values to consider. Just one of many factors I consider.
The Capitalization Rate: The Cap Rate is calculated as follows: Cap Rate = (Net Operating Income / Market Value) x 100 Cap Rate = (NOI / MV) x 100 I typically do not use cap rates in analyzing small investment property. As accurate and consistent NOI (Net Operating Income) figures are next to impossible to obtain. Have more questions just e-mail or call Darrin 208-287-0400 |
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