Getting the facts when buying rental property is the key !

When buying investment property you must have imagination, persistence, skill, and a willingness to work with an agent  who understands the rental investment cycle of property.  Your choice of a real estate agent is the most important aspect of making things happen right.

In order to make reasonable offers to purchase, you need to understand some very important factors, and the formulas to use to arrive at buying right the first time. GRM ~NRM ~NOI and, not in the following order, VAC~GSI~OI~EGI~GOI~TOE~NOI~CF~DS. Cap Rate, and NRM.

In order to make a reasonable offer to purchase, you will need to understand two simple but very important factors. The annual Gross rent Multiplier GRM and Net Rent Multiplier NRM.  The GRM will vary due to location, age, etc. and its derived by comparing the annual rent rolls, not allowing any vacancies, plus other income from the building with the selling prices of buildings of the same type sold in the same area. If a $90,000.00 building has an annual gross income of $10,000.00 the GRM would be 9.  The lower the GRM the better the buy. 

NRM is much more accurate. You need real figures, or the NOI of the building. Then you will divide the price by the NOI and the result is NRM.

Price $300,000.00 /  NOI  $30,000.00  = NRM which is 10

The lower the NRM the better the deal.

The above factors are very important. But, there are other factors to deal with. Tenant mix, Location etc.  And, remember to buy on the basis of a need to sell tomorrow.

What to expect when working with us. We will do the following in the process to purchase:

• Property management presentation.
• A long term committment to purchase through A Homebased Realtor Agent. This will be very labor intenseive. The committment is required. We will even help when working with For Sale By Owners. There is more to selling, and buying an investment property then one thinks. Do not buy just to be buying. Obtain the facts first through a Homebased Realtor Agent.
• Do the numbers above
• Review tenant mix
• Neighborhood cycles
• Physical inspection
• Tenant review
• Lease review
• Security Deposit review
• Expenses
• Utility concerns
• Advertising
• Who will end up renting the property. Policies and tenant mix will reveal this.
• Evaluate your limits
• Pre-paid rents
• Marketing your newly purchased property

If agent's, in the past, have been showing you property with out the process above, you could have serious concerns with what you end up with.

Understand tenant mix, neighbor cycles, etc. A Homebased Realtor can help in that process.

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