Comments on: How To Evaluate An Income Property http://www.3poundsofrealestate.com/2007/11/11/how-to-evaluate-an-income-property/ Awesome Resource For Real Estate Info Sat, 22 Nov 2008 14:10:04 +0000 http://wordpress.org/?v=2.3 By: Jake Compton http://www.3poundsofrealestate.com/2007/11/11/how-to-evaluate-an-income-property/#comment-387 Jake Compton Thu, 13 Nov 2008 00:14:49 +0000 http://www.3poundsofrealestate.com/2007/11/11/how-to-evaluate-an-income-property/#comment-387 opfip06wty30jl69 opfip06wty30jl69

]]> By: Salt Lake County Rental and Vacancy Rates http://www.3poundsofrealestate.com/2007/11/11/how-to-evaluate-an-income-property/#comment-87 Salt Lake County Rental and Vacancy Rates Sun, 02 Dec 2007 22:40:29 +0000 http://www.3poundsofrealestate.com/2007/11/11/how-to-evaluate-an-income-property/#comment-87 [...] information on determining the value of a rental property complete with a spread sheet to [...] […] information on determining the value of a rental property complete with a spread sheet to […]

]]> By: The Best on The Vine, week of November 11 http://www.3poundsofrealestate.com/2007/11/11/how-to-evaluate-an-income-property/#comment-62 The Best on The Vine, week of November 11 Fri, 16 Nov 2007 14:54:36 +0000 http://www.3poundsofrealestate.com/2007/11/11/how-to-evaluate-an-income-property/#comment-62 [...] to some interesting reads related to real estate. Rob at 3 Pounds of Real Estate gives you a good overview of how to evaluate an income property. In this buyers market, there are a few deals out there. If you are interested in exploring the [...] […] to some interesting reads related to real estate. Rob at 3 Pounds of Real Estate gives you a good overview of how to evaluate an income property. In this buyers market, there are a few deals out there. If you are interested in exploring the […]

]]> By: reshmi http://www.3poundsofrealestate.com/2007/11/11/how-to-evaluate-an-income-property/#comment-53 reshmi Tue, 13 Nov 2007 08:57:43 +0000 http://www.3poundsofrealestate.com/2007/11/11/how-to-evaluate-an-income-property/#comment-53 Thanks for the excel work sheet Thanks for the excel work sheet

]]> By: Rob Aubrey http://www.3poundsofrealestate.com/2007/11/11/how-to-evaluate-an-income-property/#comment-52 Rob Aubrey Mon, 12 Nov 2007 22:34:53 +0000 http://www.3poundsofrealestate.com/2007/11/11/how-to-evaluate-an-income-property/#comment-52 Hi Alex, You brought up a great point and that starts a whole new set of factors. The owner cannot depreciate it because it is a capital expense. However the new buyer would start their depreciation at their basis. That combined with the fact that the new owner will not have these major expenses for a long time will certainly factor in the price because in theory it should lower the expense. There are two ways of increasing the performance of the property. One increase the income, two lower the expense. So it definitely plays, to what extent is hard to say without a real scenario and all the facts. Hi Alex,
You brought up a great point and that starts a whole new set of factors. The owner cannot depreciate it because it is a capital expense. However the new buyer would start their depreciation at their basis. That combined with the fact that the new owner will not have these major expenses for a long time will certainly factor in the price because in theory it should lower the expense.

There are two ways of increasing the performance of the property.

One increase the income, two lower the expense.

So it definitely plays, to what extent is hard to say without a real scenario and all the facts.

]]> By: Alex Goldie http://www.3poundsofrealestate.com/2007/11/11/how-to-evaluate-an-income-property/#comment-51 Alex Goldie Mon, 12 Nov 2007 20:02:24 +0000 http://www.3poundsofrealestate.com/2007/11/11/how-to-evaluate-an-income-property/#comment-51 GRM = gross rent multiplier, the "quick & dirty" cashflow estimate that neglects expenses. One aspect of analyzing expenses is that the owner often invests tremendously in updates (e.g. roof, hvac, tuckpointing, etc.) prior to putting the property on the market. Technically speaking, this will kill a cap, but the owner will likely exclude these capital expenses from typical maintenance concerns. Should you, as a buyer, include this in your analysis of the real value, and maximal purchase price? Tough call, but it's not something that most sellers have a differing opinion of. GRM = gross rent multiplier, the “quick & dirty” cashflow estimate that neglects expenses.

One aspect of analyzing expenses is that the owner often invests tremendously in updates (e.g. roof, hvac, tuckpointing, etc.) prior to putting the property on the market. Technically speaking, this will kill a cap, but the owner will likely exclude these capital expenses from typical maintenance concerns. Should you, as a buyer, include this in your analysis of the real value, and maximal purchase price? Tough call, but it’s not something that most sellers have a differing opinion of.

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