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NOTE: The following are Economic Models used for illustration purposes only. They do not represent an offer for sale nor are they a description of a specific property. These numbers represent the ideal, then we try to come as close as possible in our search for your property. These economic models are categorized using a Gross Rent Multiplier, "GRM", meaning the annual income of the building is multiplied by a number/factor that represents average values in a specific neighborhood or for a specific type of building. In general, the lower the "GRM" the higher the cash flow. Couple a low GRM with high leverage and viola, you have an exciting investment! There are 3 categories of properties we search for, and find, in the marketplace. Add or subtract the zeroes depending on your budget. These deals are what is referred to as "Street Deals" - buildings and financing currently available in the marketplace / on the street. CATEGORY #1. “Good/Great deal on the street” 7 to 9 X gross annual income with a 25% down payment. A 5 to 10 unit building in a modest neighborhood composed of 2 bedroom 1 bath 750 square foot units renting for $700 to $850 per month. This type of building usually has the largest upside potential. Units can be improved and rents raised. Add $75.00 dollars per month to a 7 unit building = $525.00 per month X 12 months=$6,300 X 8 X gross rent multiplier = $50,400 increased equity and $6,300 increased cash flow. Click: INVESTMENT ANALYSIS AT 8 X GROSS CATEGORY #2. A10 to 14 X gross annual income building requiring more than 40% down to cash flow, usually located in an area of high desirability similar to Malibu or Beverley Hills. You would buy this type of building to park your money and keep up with inflation with the security of the area underlying your investment. The deal can be structured to yield 5% cash on cash. A highly leveraged return is not your goal. Click: INVESTMENT ANALYSIS AT 10 X GROSS CATEGORY #3. 2 to 4 units, zero to 20% down payments for investors or owner occupy. If you do not currently own property, you can qualify for 4 units up to $600,000 or so. You can live in one of the units inexpensively while taking advantage of a high leverage deal. Click: 2-4 units investor AFTER YOU OWN your building for 5 years or so, it begins to look like this: Original purchase price becomes a 6 X gross annual income. The property throws off a lot of cash, and your equity position really improves. You can re-finance at a 70% LTV, or do a 1031 exchange into a larger building. Click: INVESTMENT ANALYSIS AT 5.5 X GROSS 310-493-1999 Staff@SafariRealtors.com |