The GRM does not include expenses such as property tax, insurance, operating costs, and vacancies.
|
|
- Jodie Logan
- 7 years ago
- Views:
Transcription
1 Common Real Estate Investment Formulas I. Introduction Many agents represent clients who are investors. These investor clients can vary from first time investors buying their first rental property to very sophisticated and experienced real estate investors. Investors will often utilize or discuss certain mathematical formulas to help assess the investment potential of a property. It is important for agents to be able to understand these formulas in their practice. We will review some of the more common formulas investors utilize and discuss what is being calculated and what the utility of the formula is for investors. II. Gross Rent Multiplier Q 1. What is the gross rent multiplier? A The gross rent multiplier ( GRM ) is a commonly used method of evaluating a commercial real estate investment by calculating the number of years it would take for the annual gross rent received for the property to equal the price paid for the property. The resulting number can be used as a tool for investors to quickly survey the properties in a particular market in order to identify which properties are priced lowest in correlation to the market based gross potential income. The lower the gross rent multiplier the higher the rate of return on an investor s initial investment. Q 2. How is the gross rent multiplier Calculated? A The GRM is calculated by dividing the price of the subject commercial property by the projected annual gross income. The GRM does not include expenses such as property tax, insurance, operating costs, and vacancies. To illustrate the GRM, let s consider our commercial property priced at $729,000 where the gross rental income for the whole of 2015 is projected to be $53,100. In this case, the GRM, taken by dividing $729,000 by $53,100, would be x rents. This means that, at this gross income, it would take years for the investor to recoup the purchase price of his investment. Remember, the lower the GRM, the more gross rental income the investor will receive for each dollar invested. Gross Rent Multiplier = Price Potential Annual Gross Income = $729,000 $53,100
2 Q 3. What is a good gross rent multiplier? A There is no general answer to this question because average GRMs will normally vary with respect to both marketplace and the type of commercial property. For example, the average GRM of apartment buildings in Costa Mesa last year might have been 16 x rents while that of similar properties in Anaheim were 13 x rents. For this reason, the GRM is best used as a comparative tool for evaluating multiple properties of the same kind in the same geographical or trade area. Q 4. When should you use the gross rent multiplier? A The GRM requires very little information to calculate and it provides a quick and easy tool to evaluate comparable properties within the same market area. Comparable properties should have approximately the same gross rent multipliers. If the subject property does not, the property may require additional investigation to evaluate the reason for the discrepancy. As the GRM does not take into account taxes, operating costs, insurance or vacancy rates it does not give the investor a complete and accurate projection of the potential return on a particular investment., However, it is a concept that can be easily understood by investors. Consequently, it may be a good place for investors and agents to start in locating a sound investment. III. Capitalization Rate Q 5. What is a capitalization rate? A The capitalization rate (or cap rate ) calculation is another popular formula used in valuing commercial real estate. It is a measure of return on a commercial property based on its projected net operating income ( NOI ) for the first year of ownership. This method of evaluating commercial property is more complete and accurate than the GRM because it takes into consideration taxes, potential vacancy, insurance and other operating costs for the investor. However, this calculation is intended to show an investor s annual return on an all cash investment and does not take into consideration any interest on a loan if the seller obtains financing for the property. Q 6. How is a cap rate calculated? For the purposes of this calculation, annual net operating income is the total annual gross rental income less property taxes, vacancy rate, insurance and other operating expenses. These variables will generally vary between properties. A Cap rates are calculated as follows: Capitalization Rate = annual net operating income cost (or value) 5.34% = $38,958 $729,000
3 Q 7. When should I use a cap rate? A Similar to the GRM, the cap rate is best used as a tool to compare like-in-kind properties in the same marketplace at the same period in time. Therefore, this calculation should be used by investors and agents to ascertain 1) approximately the amount of annual income they should expect to receive from a particular investment and 2) how one potential commercial real property investment may compare to other similar, available properties in the same marketplace. Also, in the event that an agent has a client looking to sell a commercial property, the cap rate can be used as an effective tool to help establish a listing price. For example, if your client would like to sell an apartment building with an NOI of $38,958, you may want to show the investor the value of the property at a 5% cap, a 6% cap and a 7% cap (assuming this was the average range of cap rates for other similar buildings sold recently in the same marketplace) in order to help the seller determine a listing price. You would then calculate this price as follows: Price = Net Operating Income Capitalization Rate $729,000 = $38,958 (NOI) 5.34% (CAP) Again, for the purposes of these calculations, there is no general right cap rate. Instead, you should look at the cap rates of recently sold or listed comparable properties as well as the goals of the particular client when deciding on an appropriate listing price. Q 8. What are the negative aspects of using cap rates? A As mentioned above, one of the more prominent weak points of using cap rates to determine the value of commercial real estate is that they do not take into consideration the economic impact that financing will have on the investment. Additionally, commercial real estate investors often seek properties with the potential for future up-side. This is often referred to as value-add. One of the most common ways for investors to do this is to buy into a commercial property with below market rents (preferably expiring in the near future) and later raising those rents for a boost in NOI. Due to the fact that cap rates generally consider only the NOI produced in the first year of ownership, you may miss a potential value-add opportunity if you solely consider the cap rate without further due diligence. Refer to the Pro Forma rents and the cap rate of 5.70% versus that of the cap rate for Actual Rents yielding a cap rate of 5.34%. Cash on Cash Return The cash on cash return measures the first year cash return against the cash invested at the beginning of the year. The advantage of the cash on cash return is that it takes into account vacancy, credit losses, other income, operating expenses, AND debt financing (unlike the cap rate). It also is a simple formula that does not require projecting out cash flow over multiple years. The negative aspect of using the cash on cash return is that it only takes into account one year of operating data.
4 Cash on Cash Return = Net Annual Income IV. Price Per Square Foot Comparables Total Cash Invested (does not include financing) Q 9. Can you value commercial real property by using price per square foot comparables? A In residential real estate, agents often use price per square foot comparables in determining a reasonable price for a property. In commercial real estate, price per square is often used in addition to cap rates and other calculations of value when comparing like-kind properties in the same market place. The price per square foot of a property is taken by dividing the total price of the property by the amount of gross square feet that make up the structure on the property. For example, if a 3,332 square foot building is offered at $729,000, its respective price per square foot is $ (729,000/3,3332 = ). Price Per Square Foot = Purchase Price Building S. F. $ = $729,000 3,332 However, this calculation does not take into consideration the amount of units or quality of the complex in each property and thus can be an inaccurate representation of investor value when evaluating apartment buildings or other multi-family investment properties. Generally, monthly rental prices for apartment units are not calculated as a measure of price per square foot, but instead by taking into account the amount of bedrooms, building amenities, and quality. Consequently it is not uncommon for one apartment unit to rent for the same amount (or even more) than another unit in a different complex in the same area; even if it is smaller. As a result, two apartment buildings that have the same total livable square footage and are located in the same marketplace (or even on the same street) may produce different NOI s and will have different values for potential investors. V. Price Per Unit Comparables Q 10. Can I value apartment buildings and other multi-family properties by using price per unit comparables? A This method of commercial property valuation is generally used exclusively for multi-family properties. An apartment building s price per unit is taken by dividing the total price of the property by the amount of units in that building. For example, a 3-unit apartment building being listed at $729,000 has a price per unit of $243,000 (729,000/3 = 243,000). Price Per Unit = Purchase Price Number of Units $243,000 = $729,000 3
5 Similar to using price per square foot comparables, price per unit comps can be a useful tool when combined with more precise calculations or to quickly filter investment opportunities in a given marketplace. However, due to the fact that this measurement does not consider operating costs or net income, it should be used by neither agents nor investors as a sole means of determining the soundness of a potential investment opportunity. Loan to Value The loan to value ratio (LTV) is simply the ratio of the loan amount to the value of the property. This is a critical constraint banks face when financing a property, and ultimately the value side of the equation is typically restricted by a third party appraisal. Loan to Value (LTV) = Loan Amount Lower of Purchase Price or Appraised Value Debt Service Coverage Ratio The debt service coverage ratio (DSCR) is expressed as net operating income (NOI) divided by total annual debt service. This is another critical constraint banks face when financing a property. Typically both the loan to value ratio and the debt service coverage ratio will be determined by a bank s loan policy. These are both important formulas to know because a loan amount will almost always be limited by the lesser of the two constraints. In other words, the maximum loan amount will be limited by either LTV or DSCR. DSCR = Net Operating Income / Total Debt Service In personal finance, it is a ratio used by bank loan officers in determining income property loans. This ratio should ideally be over 1. That would mean the property is generating enough income to pay its debt obligations. A DSCR of less than 1 would mean a negative cash flow. A DSCR of less than 1, say.95, would mean that there is only enough net operating income to cover 95% of annual debt payments. For example, in the context of personal finance, this would mean that the borrower would have to delve into his or her personal funds every month to keep the project afloat. Generally, lenders frown on a negative cash flow, but some allow it if the borrower has strong outside income. Operating Expense Ratio The operating expense ratio is simply the total operating expenses divided by effective gross income (EGI) or gross operating income. This ratio is a useful measure that shows you what percentage of income is consumed by operating expenses. Looking at operating expense ratio trends over time in a multi-year analysis can sometimes reveal important trends. The operating expense ratio is a useful tool when comparing the expenses of similar properties. If a particular piece of property has a much higher OER for a particular expense, such as maintenance, an investor should see that as a red flag and should look deeper into why maintenance expenses are so much higher than comparable properties.
6 Net Operating Expense Ratio = Net Operating Expenses Gross Scheduled Income 23.63% = $ 12,549 53,100
MULTI-FAMILY LOAN OVERVIEW
MULTI-FAMILY LOAN OVERVIEW A BORROWER S GUIDE MULTI-FAMILY LOAN OVERVIEW GUIDE Multi-Family Mortgage Underwriting Guidelines and Process Commercial financing for multi-family properties is underwritten
More informationUnderwriting Commercial Loans
Underwriting Commercial Loans T he objective of this study is to understand the basic principles of underwriting for multifamily housing and commercial real estate loans. As a mortgage broker, real estate
More informationINCOME APPROACH Gross Income Estimate - $198,000 Vacancy and Rent Loss - $9,900
INCOME APPROACH The Income Approach considers the return on Investment and is similar to the method that investors typically use to make their investment decisions. It is most directly applicable to income
More informationCommercial Lending Glossary
Commercial Lending Glossary Acre: Unit of land measure equal to 43,560 square feet. Amortization (To Amortize): The act of paying off a debt through scheduled periodic payments. Example: A 20 year amortization
More informationSECTION FOUR DEBT SERVICE COVERAGE RATIO
SECTION FOUR DEBT SERVICE COVERAGE RATIO The previous Section thoroughly covered Income and Expense on commercial real estate. Once the Net Operating Income (No1) is accurately calculated it is then used
More informationwww.commercialloansinalaska.com
Financial Corporation 5313 Arctic Blvd., Suite 206 Anchorage, Alaska 99518 (907)279-8551 www.commercialloansinalaska.com CHAPTER 1 INTRODUCTION TO COMMERCIAL LOANS Commercial Loans are defined as: "Any
More informationProperty Report : House in Dallas
Property Report : House in Dallas Generated on: Jul 6, 2016 Author: Guest Page 1 of 11 Table of Contents Executive Summary 3 Property Description 4 Operational Effectivness 5 Financial Effectivness 6 Financing
More informationBroker Final Exam Review Math
Broker Final Exam Review Math Copyright Gold Coast Schools 1 Minimum Annual Production Page 73 A brokerage office had 200 sales last year. After paying sales commissions to the associates, there was $229,000
More informationCOMMERCIAL LOAN OVERVIEW
COMMERCIAL LOAN OVERVIEW A BORROWER S GUIDE COMMERCIAL LOAN OVERVIEW GUIDE Commercial Mortgage Underwriting Guidelines and Process Commercial financing for commercial properties is underwritten on a case
More informationSample Property 930 LaVergne Ln La Vergne, TN 37086
Property Report Sample Property Presented by: My Company 123 Main St Anywhere, CA 12345 Office: Mobile: Fax: You can customize the footer too! 1 Overview Sample Property Purchase Info Square Feet (2 Units)
More informationGENERAL MATH PROBLEM CATEGORIES AND ILLUSTRATED SOLUTIONS MEASUREMENT STANDARDS WHICH MUST BE MEMORIZED FOR THE BROKER TEST
Chapter 17 Math Problem Solutions CHAPTER 17 GENERAL MATH PROBLEM CATEGORIES AND ILLUSTRATED SOLUTIONS MEASUREMENT STANDARDS WHICH MUST BE MEMORIZED FOR THE BROKER TEST Linear Measure 12 inches = 1 ft
More informationReal Estate Investment Newsletter July 2004
The Case for Selling Real Estate in California This month I am writing the newsletter for those investors who currently own rental properties 1 in California. In any type of investing, be it real estate,
More informationChapter 38. Appraising Income Property INTRODUCTION
Chapter 38 Appraising Income Property INTRODUCTION The income appraisal approach estimates the current market value for a real property by projecting and analyzing the income that the property could generate.
More informationUnderstanding the APOD How to Crunch the Numbers on Your Investment Transaction
Understanding the APOD How to Crunch the Numbers on Your Investment Transaction Commercial Investment Education Alliance Commercial Success Series 105 1 Commercial Investment Education Alliance Please
More informationDiscretionary Capital Expenditures. Discretionary Capital Expenditure. Presented by Byron Smith, CCIM
Discretionary Capital Expenditures Discretionary Capital Expenditure Presented by Byron Smith, CCIM Discretionary Capital Expenditure Case Study Overview During the holding period of a commercial real
More informationCash Flow Analysis Multi-Family Building For Sale Boston, Massachusetts 02215
Property Report Cash Flow Analysis Presented by: Pantheon Property Group 665 Beacon Street, Suite #305 Boston, Massachusetts 02131 Office: Mobile: (830) 660-5265 Data Analysis Provided by Pantheon Property
More informationCalculator and QuickCalc USA
Investit Software Inc. www.investitsoftware.com. Calculator and QuickCalc USA TABLE OF CONTENTS Steps in Using the Calculator Time Value on Money Calculator Is used for compound interest calculations involving
More informationWhat is a Credit Score and Why Do I Care What It Is?
What is a Credit Score and Why Do I Care What It Is? Your Credit Score is a lot like the score you get on a test. You get points for good credit decisions and behavior and you get points taken away for
More informationAN INTRODUCTION TO REAL ESTATE INVESTMENT ANALYSIS: A TOOL KIT REFERENCE FOR PRIVATE INVESTORS
AN INTRODUCTION TO REAL ESTATE INVESTMENT ANALYSIS: A TOOL KIT REFERENCE FOR PRIVATE INVESTORS Phil Thompson Business Lawyer, Corporate Counsel www.thompsonlaw.ca Rules of thumb and financial analysis
More informationReal Estate Investment Analysis and Advanced Income Appraisal BUSI 331
Real Estate Division Real Estate Investment Analysis and Advanced Income Appraisal BUSI 331 Presentation by Graham McIntosh Outline 1. Introduction 2. Investment Analysis vs. Appraisal 3. The After Tax
More informationBUYING REAL ESTATE WITH AN IRA AND A NON-RECOURSE LOAN
BUYING REAL ESTATE WITH AN IRA AND A NON-RECOURSE LOAN BY: Mathew Sorensen, Partner KYLER KOHLER OSTERMILLER & SORENSEN, LLP 3033 N. Central Avenue, Suite 415 Phoenix, AZ 85012 Phone 602-761-9798 www.sdirahandbook.com
More informationCOMMERCIAL REAL ESTATE INVESTING
REDEFINING REAL ESTATE INVESTING CRE101: INTRODUCTION TO COMMERCIAL REAL ESTATE INVESTING COMMERCIAL REAL ESTATE INVESTING ABOUT REALCROWD RealCrowd is a private, secure and simple-to-use online platform
More informationHUD INSURED LOANS for ACQUISITION or REFINANCE of EXISTING OCCUPIED RENTAL APARTMENTS Section 223(f) and 202/223(f)
HUD INSURED LOANS for ACQUISITION or REFINANCE of EXISTING OCCUPIED RENTAL APARTMENTS Section 223(f) and 202/223(f) ~ Multifamily Accelerated Processing ~ PROGRAM FEATURES Fixed-rate, level pay Non-recourse
More informationLecture Notes. Dollars and Sense of Building Rehabilitation. Attracting Equity and Debt. National Development Council
1 Dollars and Sense of Building Rehabilitation Attracting Equity and Debt 2 Lecture Notes 927 Dudley Road Edgewood, KY 41017 ph: 859-578-4850 fax: 859-578-4860 2006 All rights reserved. Version: August
More informationHome HOW TO BUY A WITH A LOW DOWN PAYMENT 3 % A consumer s guide to owning a home with less than three percent down. or less
A consumer s guide to owning a home with less than three percent down. 3 % WITH A LOW DOWN PAYMENT or less HOW TO BUY A Home If you re dreaming of buying a home, congratulations. You re in good company!
More informationTHE VALUATION OF INCOME PROPERTIES USA 1. INTRODUCTION 1
Investit Software Inc. Real Estate Investment, Buy vs. Lease, Lease & Development Analysis Software www.investitpro.com 1-877-878-1828 Email: Investit@investit.ca THE VALUATION OF INCOME PROPERTIES USA
More informationBefore you develop or acquire a property, you must know how big it is size is the key metric for real estate.
Real Estate Development Key Terms If you want to understand real estate development, you need to know the key terms used to describe properties whether you re developing the properties from the ground
More informationFor the non real estate professional
For the non real estate professional An introductory case study of the building of a Transit Oriented Development Views from For Profit vs. Non-Profit Developers For Profit Developer Non-Profit Developer
More informationBroker. Federal Income Tax Laws Affecting Real Estate. Chapter 14. Copyright Gold Coast Schools 1
Broker Chapter 14 Federal Income Tax Laws Affecting Real Estate Copyright Gold Coast Schools 1 Learning Objectives List the 2 principal tax deductions available to homeowners List the 2 types of home loans
More informationJournal Of Financial And Strategic Decisions Volume 11 Number 1 Spring 1998
Journal Of Financial And Strategic Decisions Volume 11 Number 1 Spring 1998 AN EMPIRICAL STUDY OF THE IMPACT OF FOREIGN OWNERSHIP ON THE VALUES OF U.S. COMMERCIAL PROPERTIES Arnold L. Redman * and N. S.
More informationSS.912.FL.4.3. Assignment 8 Steps 1 and 2
FL-V2-012015 Standard 4: Using Credit Code SS.912.FL.4.1 Discuss ways that consumers can compare the cost of credit by using the annual percentage rate (APR), initial fees charged, and fees charged for
More informationNAR Frequently Asked Questions Health Insurance Reform
NEW MEDICARE TAX ON UNEARNED NET INVESTMENT INCOME Q-1: Who will be subject to the new taxes imposed in the health legislation? A: A new 3.8% tax will apply to the unearned income of High Income taxpayers.
More informationCommercial Real Estate Investing 101
Commercial Real Estate Investing 101 RealCrowd invest@realcrowd.com 2013 RealCrowd. All rights reserved. A better way to invest in real estate. What is RealCrowd? RealCrowd offers direct real estate investing
More informationIncome Capitalization Analysis Re: Example Property By: Your Name of Your Company Name
Income Capitalization Analysis Re: Example Property By: Your Name of Your Company Name To obtain a reliable indication of a property's Market Value from the Income Capitalization Approach, it is necessary
More informationICASL - Business School Programme
ICASL - Business School Programme Quantitative Techniques for Business (Module 3) Financial Mathematics TUTORIAL 2A This chapter deals with problems related to investing money or capital in a business
More informationRe/Max Acclaimed Realty Commercial Division Industry Specific Training Program
Re/Max Acclaimed Realty Industry Specific Training Program This course is meant to get brand new agents up to speed with the industry knowledge quickly. If a brand new agent completes this course within
More informationAchieving your goals through Financing. Cooperative Financing Models that may work for you
Achieving your goals through Financing Cooperative Financing Models that may work for you Overview Cooperative Financing Overview of the environment Interest Rates Why now is the best time to borrow Reasons
More informationUnderstanding Irish Real Estate Investment Trusts. For Financial Advisor Use Only
Understanding Irish Real Estate Investment Trusts For Financial Advisor Use Only What is a Real Estate Investment Trust (REIT)? A REIT is a public listed company which has as its main activity the ownership
More informationIMF Country Report No. 11/365
The mortgage finance system in Canada is quite strong, as evidenced by its performance during the recent financial crisis. Home buyers who cannot make a 20 percent down-payment are required to insure their
More informationcüéä wxçà tä VâáàÉÅ [ÉÅxá
Understanding Price Per Square Foot Do you truly understand what you are asking when you ask the question, How much per square foot do you charge to build a house? Let s take a little deeper look at this
More informationFIN-331 PHASE 2 HOMEWORK QUESTIONS (ERRATA: 10-24-2015)
FIN-331 PHASE 2 HOMEWORK QUESTIONS (ERRATA: 10-24-2015) Chapter 7: Key Terms Accrued depreciation Appraisal Comparable properties Market value Property adjustments Replacement cost Reproduction cost Restricted
More informationDisclaimer. Investing Observations: Things I Wish I d Known Sooner. Outline. Taxes. Andy Poggio June 10, 2016. Taxes Risk / Reward Asset Classes:
Disclaimer Investing Observations: Things I Wish I d Known Sooner Andy Poggio June 10, 2016 I am not a trained investment advisor Not all of my investment decisions have worked out well This presentation
More informationFINANCIAL ANALYSIS GUIDE
MAN 4720 POLICY ANALYSIS AND FORMULATION FINANCIAL ANALYSIS GUIDE Revised -August 22, 2010 FINANCIAL ANALYSIS USING STRATEGIC PROFIT MODEL RATIOS Introduction Your policy course integrates information
More informationReverse Mortgage. by Jeffrey D. Smith
There are finance companies that are offering the "Reverse Mortgage" to seniors (at least age 62). Seniors with a substantial amount of equity in their residence are targets of this aggressive predatory
More informationFHA INSURED LOANS ~ Multifamily Accelerated Processing (MAP)
FHA INSURED LOANS ~ Multifamily Accelerated Processing (MAP) STREAMLINED REFINANCE Of EXISTING OCCUPIED RENTAL APARTMENTS with EXISTING FHA INSURED LOAN Section 223(a)(7) Family & Elderly Family Apartments
More informationENTREPRENEURIAL FINANCE: Strategy Valuation and Deal Structure
ENTREPRENEURIAL FINANCE: Strategy Valuation and Deal Structure Chapter 9 Valuation Questions and Problems 1. You are considering purchasing shares of DeltaCad Inc. for $40/share. Your analysis of the company
More informationFHA Section 542(c) Risk-Sharing Program for Multifamily Housing Program Rules
FHA Section 542(c) Risk-Sharing Program for Multifamily Housing Program Rules Purpose Kentucky Housing Corporation (KHC) has partnered with HOPE of Kentucky, LLC, and the Community Reinvestment Fund, USA
More informationCommercial Mortgage Types and Decisions
Commercial Loans vs Home Loans Fin 5413 Commercial Mortgage Types and Decisions Commercial mortgages and notes are not as standardized as home loans Although this is changing with growth in commercial
More informationPeeling The Onion on Capitalization Rates
The compression in cap rates during the 2005-2007 commercial real estate (CRE) bubble led to miscalculations on the part of many sophisticated investors in regards to exit valuations. As we quantitatively
More informationStep 1: Determine the Size, Parameters and Construction Timeline for the Property
The Real Estate Development Process While real estate development models may look complex, the actual concepts are simpler than what you see for normal companies. Real estate development modeling is different
More informationBorrowing 101. Resources. Are you ready to Borrow?
Borrowing 101 The BDC wants your business to succeed and in turn pay the BDC back. Our programs are revolving loan funds that require loans to be repaid so that we can lend our dollars to other businesses
More informationDCU BULLETIN Division of Credit Unions Washington State Department of Financial Institutions Phone: (360) 902-8701 FAX: (360) 704-6901
DCU BULLETIN Division of Credit Unions Washington State Department of Financial Institutions Phone: (360) 902-8701 FAX: (360) 704-6901 December 19, 2007 No. B-07-13 Structuring a Member Business Lending
More informationFHA INSURED LOANS ~ Multifamily Accelerated Processing (MAP) NEW CONSTRUCTION or SUBSTANTIAL REHABILITATION Of RENTAL APARTMENTS
FHA INSURED LOANS ~ Multifamily Accelerated Processing (MAP) NEW CONSTRUCTION or SUBSTANTIAL REHABILITATION Of RENTAL APARTMENTS Section 221(d) Family Apartments, all Areas Section 220 Family Apartments,
More informationHow to Forecast Your Revenue and Sales A Step by Step Guide to Revenue and Sales Forecasting in a Small Business
How to Forecast Your Revenue and Sales A Step by Step Guide to Revenue and Sales Forecasting in a Small Business By BizMove Management Training Institute Other free books by BizMove that may interest you:
More informationCREFC PRINCIPLES BASED UNDERWRITING FRAMEWORK December 2010
I. Introduction Commercial mortgages provide the capital and liquidity for real estate owners to build and operate the properties in which we live, work, and shop; the properties that house the businesses,
More informationUseful information for Loan Officers regarding Residential Appraisals
Useful information for Loan Officers regarding Residential Appraisals USPAP USPAP stands for Uniform Standards of Professional Appraisal Practice. USPAP establishes the standards and guidelines for real
More informationOFFERING MEMORANDUM. ALPINE APARTMENTS AND MINI STORAGE 45414 SE North Bend Way North Bend, WA
OFFERING MEMORANDUM ALPINE APARTMENTS AND MINI STORAGE 45414 SE North Bend Way North Bend, WA OFFERING SUMMARY Name: Address: Alpine Apartments and Mini Storage 45414 SE North Bend Way North Bend WA 98045
More informationUnderstanding the Appraisal
Understanding the Appraisal Understanding the Appraisal Much of the private, corporate and public wealth of the world consists of real estate. The magnitude of this fundamental resource creates a need
More informationIntroduction to Profit and Loss Accounts and Balance Sheets
W J E C B U S I N E S S S T U D I E S A L E V E L R E S O U R C E S. 2008 Spec Issue 2 Sept 2012 Page 1 Introduction to Profit and Loss Accounts and Balance Sheets Specification Requirement -Understand
More informationSINGLE FAMILY DEVELOPMENT
SINGLE FAMILY DEVELOPMENT Agenda April 1 Introductions Background of class participants Ground rules Course outline and objectives The single family crisis Single family versus multifamily development
More informationIntroduction. Capitalized terms used in this Manual are defined in Appendix A, Glossary at the end of this Manual.
Introduction This Low-Income Housing Tax Credit Compliance Manual (the Manual ) is intended to provide a basic description and explanation of the rules and regulations to maintain compliance for properties
More informationGuide to Getting Loans on Investment Properties. Mark Ferguson. Copyright 2013 All rights reserved Invest Four More Proprietary
Guide to Getting Loans on Investment Properties Mark Ferguson Table of Contents Guide to Getting Loans on Investment Properties... 1 Should you get a loan for investment properties?... 3 Why are the returns
More informationEFFECTIVE TAX RATE In Direct Capitalization. Effective Tax Rate in the Capitalization Rate instead of Real
Effective Tax Rate, ETR, and Direct Capitalization Page 1 of 16 EFFECTIVE TAX RATE In Direct Capitalization Example using Direct Capitalization to estimate value and using Effective Tax Rate in the Capitalization
More informationWhite Paper. LIHTC Apartments Mortgage Risk Why They Do Not Default. By George Vine, CFA
White Paper LIHTC Apartments Mortgage Risk Why They Do Not Default By George Vine, CFA Introduction People generally know that LIHTC mortgages (first mortgages on low income housing tax creditfinanced
More informationEQUIVENTURE. Insured Loan Program. Multifamily. Capital,LLC. 90% Loan-to-Cost. 40 Year amortization. 40 Year Term (no balloon) No maximum loan amount
New Construction / Substantial Rehabilitation Multifamily 90% Loan-to-Cost 40 Year amortization 40 Year Term (no balloon) spreads over the Ten Year Treasury yield. Developer s Fee of 10% of cost allowed
More informationDALLAS CENTRAL APPRAISAL DISTRICT DCAD VALUATION PROCESSES
DALLAS CENTRAL APPRAISAL DISTRICT DCAD VALUATION PROCESSES DALLAS CENTRAL APPRAISAL DISTRICT PRESENTATION OVERVIEW The goals and objectives of this presentation is to provide Property Owner s an overview
More informationOwner-User / Office Investment. 850 Colorado Boulevard Los Angeles, CA 90041
Joe Cooper Director of Investments 626-399-9008 joebcooper4@gmail.com DRE01320599 Kevin Hurley Managing Director 626-484-1897 khurley@kwcommercial.com DRE01237798 Huge Rental Upside with Improved Lease
More informationHow to Get a Great Commercial Loan Commercial Mortgage Secrets Your Banker will be THRILLED You Know. Special Report
How to Get a Great Commercial Loan Commercial Mortgage Secrets Your Banker will be THRILLED You Know Special Report by Ken Kaplan Commercial Mortgage Specialist President, K2 Commercial Finance 2009 Ken
More informationThe principle of excess land is a fundamental concept in appraisal practice,
A Discussion of Excess Land Concepts and Theory by Joseph M. Webster, MAI The principle of excess land is a fundamental concept in appraisal practice, but surprisingly few articles have been devoted to
More informationAccounts Payable Accounts Receivable Amortization Annual Interest Rate Annual Percentage Rate Attorney Fees Bridge Financing
Accounts Payable Accounts payable are business debts that must be paid off within a relatively short period of time, as opposed to long term debt such as mortgage loans and equipment loans. Accounts payable
More informationLetter of Intent (LOI) and Comprehensive Proposal (samples)
Letter of Intent (LOI) and Comprehensive Proposal (samples) By Theresa Bradley-Banta Multifamily Mentoring and Consulting Brought To You By BIGFISHTOPDOGS.COM Copyright and Disclaimer Copyright 2012 by
More informationMARKET COMMENTARY. Canadian Real Estate Companies and REITs December 2013. 2013 Horizon Kinetics LLC
Canadian Real Estate Companies and REITs 2013 Horizon Kinetics LLC In their continued search for yield, many investors have turned to Real Estate Investment Trusts ( REITs ). These companies pay out a
More informationOutstanding mortgage balance
Using Home Equity There are numerous benefits to owning your own home. Not only does it provide a place to live, where you can decorate as you want, but it also provides a source of wealth. Over time,
More informationMORTGAGE LOAN INSURANCE TO FACILITATE AFFORDABLE RENTAL PROPERTIES
MORTGAGE LOAN INSURANCE TO FACILITATE AFFORDABLE RENTAL PROPERTIES CMHC S Approach to Mortgage Loan Insurance for Affordable Rental Projects Ministry of Municipal Affairs and Housing Updated February 2007
More informationInvestment Analyst Case Study Iron Bank Real Estate Investors The Lyric (215 10 th Ave E) Seattle-Tacoma-Bellevue Metro
Investment Analyst Case Study Iron Bank Real Estate Investors The Lyric (215 10 th Ave E) Seattle-Tacoma-Bellevue Metro OVERVIEW The Lyric ( Property ) is being offered for sale with an asking price of
More informationDrexel Brothers Product Sheet Updated 9/3/2014
Drexel Brothers Product Sheet Updated 9/3/2014 Permanent Commercial Financing Drexel Brothers Bank Type Products 1. FULL RECOURSE SBA 504 PROGRAM Minimum 680 FICO, full tri-merge credit report with scores
More informationFinancial Statements and Ratios: Notes
Financial Statements and Ratios: Notes 1. Uses of the income statement for evaluation Investors use the income statement to help judge their return on investment and creditors (lenders) use it to help
More informationChapter 15 Questions Real Estate Financing: Practice
Chapter 15 Questions Real Estate Financing: Practice 1. Kahlid has been making periodic payments of principal and interest on a loan, but the final payment will be larger than the others. This is a(n)
More informationShare Loan and Underlying Mortgage Financing. Jeremy Morgan, NCB Larry Mathe, NCB
Share Loan and Underlying Mortgage Financing Jeremy Morgan, NCB Larry Mathe, NCB About NCB NCB is the premier lender to housing cooperatives nationwide. NCB has financed over $6 Billion to housing cooperatives
More informationState Tax Commission. Basic Income. MAAO Prerequisite Course. Published July 2014
State Tax Commission Basic Income MAAO Prerequisite Course Published July 2014 All rights reserved. This material may not be published, broadcast, rewritten or redistributed in whole or part without the
More informationHow to Sell Your Home FAST And For FULL PRICE!!
FREE Special Report: Compliments of www.bobbuysfast.com How to Sell Your Home FAST And For FULL PRICE!! DISCOVER how you can sell your home fast and for Full Price even if your house has been on the market
More informationSmithfield Motors: A case in lending, strategy, and value
ABSTRACT Smithfield Motors: A case in lending, strategy, and value Steve A. Nenninger Sam Houston State University The primary subject matter of this case is financial statement analysis. Issues examined
More informationRMA Commercial & Business Banking
RMA Commercial & Business Banking The Commercial Real Estate Lending Decision Process The Commercial Real Estate Lending Decision Process, authored by The Risk Management Association and brought to you
More informationVOCABULARY INVESTING Student Worksheet
Vocabulary Worksheet Page 1 Name Period VOCABULARY INVESTING Student Worksheet PRIMARY VOCABULARY 1. Savings: 2. Investments: 3. Investing: 4. Risk: 5. Return: 6. Liquidity: 7. Stocks: 8. Bonds: 9. Mutual
More informationGCSE Business Studies. Ratios. For first teaching from September 2009 For first award in Summer 2011
GCSE Business Studies Ratios For first teaching from September 2009 For first award in Summer 2011 Ratios At the end of this unit students should be able to: Interpret and analyse final accounts and balance
More informationNon-Recourse Financing for a Self-Directed IRA Investment
Non-Recourse Financing for a Self-Directed IRA Investment Transaction Summary Date: September 2012 Property Description: 12,720 SF retail building built in 2001 in good condition. The property is 100%
More informationHelpful Information for a First Time Mortgage
Helpful Information for a First Time Mortgage Getting Started Many people buying their first home are afraid lenders don't really want to work with them. But that's simply not true. Without you, there
More informationFHA Home Loans 101 An Easy Reference Guide
FHA Home Loans 101 An Easy Reference Guide Updated for loans on or after June 3, 2013 Congratulations on Starting Your Journey to Home Ownership This guide offers a quick look at vital information you
More informationDISCLAIMER: Copyright: 2011
DISLAIMER: This publication is intended for EDUATIONAL purposes only. The information contained herein is subject to change with no notice, and while a great deal of care has been taken to provide accurate
More informationNational Policy Statement 29 Mutual Funds Investing in Mortgages SECTION III INVESTMENT POLICY SECTION IV DISCLOSURE
National Policy Statement 29 Mutual Funds Investing in Mortgages SECTION I SECTION II APPLICABILITY DEFINITIONS SECTION III INVESTMENT POLICY SECTION IV DISCLOSURE National Policy Statement 29 Mutual Funds
More informationYOUR FIRST HOME. Home Buying by the Book. The Proven Path to Home Ownership. North Florida Home Team Becky Bortzfield
YOUR FIRST HOME The Proven Path to Home Ownership Home Buying by the Book North Florida Home Team Becky Bortzfield Introduction After Hurricane Katrina destroyed their beloved New Orleans, many former
More informationEssex Manor Condos 813 IRMA AVENUE, ORLANDO, FL 32803. Property Highlights: Sixteen 1-Bed/1-Bath Luxury Units. Well-Maintained Property
Essex Manor Condos 813 IRMA AVENUE, ORLANDO, FL 32803 Property Highlights: Sixteen 1-Bed/1-Bath Luxury Units Well-Maintained Property 3 Minutes from Interstate 4 CORPORATE OFFICE 3451 TECHNOLOGICAL AVENUE
More informationTHE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT
PROSPECTUS May 1, 2016 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT This prospectus is attached to two other types of prospectuses. The first describes either a variable annuity contract or a
More informationHayward Apartments 2049 WEST HAYWARD AVENUE, PHOENIX, AZ 85021
Hayward Apartments 2049 WEST HAYWARD AVENUE, PHOENIX, AZ 85021 For More Information Please Contact: www.orionmultifamilygroup.com Alon Shnitzer John Kobierowski Rue Bax Doug Lazovick Eddie Chang (480)
More informationTips for Efficient Short Sales
s for Efficient Short Sales A guide for real estate professionals October 2015 s to avoid delays 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Get educated about Bank of America short sales Set expectations: short
More informationLow Income Housing Tax Credit Program
Low Income Housing Tax Credit Program By Ed Gramlich, Director of Regulatory Affairs, National Low Income Housing Coalition Administering Agency: Internal Revenue Service (IRS) of the Department of the
More informationNational Margin Lending. Make your investment portfolio work for you
National Margin Lending Make your investment portfolio work for you Contents What is Margin Lending? 3 Why choose National Margin lending? 5 Why gear? 6 How much can you borrow with National Margin Lending?
More informationIntroduction to Real Estate Investment Appraisal
Introduction to Real Estate Investment Appraisal Maths of Finance Present and Future Values Pat McAllister INVESTMENT APPRAISAL: INTEREST Interest is a reward or rent paid to a lender or investor who has
More informationInvestment Property Offering
Investment Property Offering The Slope Apartments Stable market area with strong population and employment growth Value add opportunity with loss to lease below market rents Strong market demand with easy
More informationFI3300 Corporation Finance
Learning Objectives FI3300 Corporation Finance Spring Semester 2010 Dr. Isabel Tkatch Assistant Professor of Finance Explain the objectives of financial statement analysis and its benefits for creditors,
More information