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Opportunity Analyzer
SMART Real Estate Investing System

Opportunity Analyzer©










DECISION POINTS
SMARTiScore * SMARTiScore is a composite of scoring factors allowing for quick, clear evaluation of properties; 1 point given for each of the following: GRM < 16.5; GRM < Average for Area; Cash Flow > $0; CF >= $500; Net Equity Gain >= $100K; 10 Year ROI >= 100%; 10 Year ROI >= 200%; Doubling Year <= 7; Rents >= Market *



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GRM * GRM (Gross Rent Multiplier) = Price / Total Annual Income; useful indicator to quickly determine likelihood of good cash flow; the lower the GRM, the better for the buyer; GRM under 14.0 is usually at least break-even CF *
Ave GRM/City: * Compare to other cities *
Net Monthly Cash Flow * Cash Flow = NOI - Mortgage - Vacancy *
Net Equity Gain * Total of Cash Flow + Appreciation + Mortgage Payback for the specified investment period; *** above and beyond Total Investment *
Opportunity ROI * Opportunity Return on Investment = Net Equity Gain / Total Investment *
Effective Monthly Cash Flow * Net Equity Gain / total # months of the investment period (e.g., 10 years = 120 months) *
Doubling Year * First year the ROI passes 100% (* Tip: 10% annual doubles in 7 years!) *
Total Investment * Total Investment = Down Payment + Est Closing Costs + Est Up Front Repairs *
Property Value @ End * Estimated value of investment property at the end of the investment period *
Cap Rate * Capitalization Rate (Cap Rate) = NOI / Sale Price *

PROPERTY


(Click image for more pix)
Property Address
Area
Property Id * Typically the MLS identifier; for reference purposes *
# Units * Typically 1-4; these calculations work best with under 5 units *
Sq Ft
Price * Working this number changes Cash Flow and many other results * $
Price/Unit
Price/Sq Ft
DOM * Days On Market / Cumulative Days On Market (can be previously Expired, Cancelled, Withdrawn, etc.) *
Income/Sq Ft * Total Monthly Income Per Square Foot; Comparative Indicator *

INCOME / UNIT DETAIL
Units * Actual # Bedrooms & Rents from the MLS (where available) + Market Rents (where available) * Br MLS Pro Forma
Unit 1
Unit 2
Unit 3
Unit 4
Unit Totals: * Sum of Monthly MLS & Pro Forma Rents *
Total Monthly Income Used * Sum of Monthly Rents + Other Income; AKA 'Gross Scheduled Income' (GSI) *

LOAN / TOTAL INVESTMENT
Down Payment * Typically lenders require min 25% down on income properties; some programs can be less; *** The more you put down, the better your Cash Flow and Net Equity Gain! * %
Loan Amount
Years * Number of years to amortize the loan *
Interest Rate %
Monthly Mortgage
Estimated Closing Costs * Buyer Closing Costs are typically 1-2% of the Sale Price; we use 1.5% * 0.0%
Estimated Up Front Repairs * We use 1% as a rough estimate * %
Total Investment * Total Investment = Down Payment + Est Closing Costs + Est Up Front Repairs *

EXPENSES
Property Management * Typically 7-10% of Monthly Income; enter '0' if you self-manage * %
HOA * Monthly Homeowners Association Dues *
Property Tax * Defaults to L.A. County Rate * %
Insurance Rate * Typical Insurance Factor, Based on Sale Price * %
Reserves/Unit * Monthly set-aside for future maintenance expenses (e.g., replace carpet, new stove) *
Other Expenses
TOTAL Expenses * Total Expenses = Prop Tax + Ins + Reserves + PMI + Prop Mgmt + HOA + Other; As a % of Total Income *
Vacancy (not Expense) * Default 5% Vacancy is industry "standard"; equivalent to 2.5 weeks a year vacant; Vacancy is NOT an expense! * %
Net Operating Income (NOI) * NOI = Gross Scheduled Income - Total Expenses (never includes Mortgage) *

OPPORTUNITY
Opportunity Years * Total investment time horizon; how long you plan to keep the property * years
Cumulative Appreciation * National annual average real estate appreciation is about 5% * %
Cumulative Cash Flow * Factor for estimated annual increases of both Income and Expenses; compare to CPI * %
Cumulative Principle Reduction * Total principal reduction over opportunity years *
Gross Equity Gain * Total of Cash Flow + Appreciation + Mortgage Payback for the specified investment period; *** above and beyond Total Investment *
Gross Opportunity ROI * Return on Investment = Net Equity Gain / Total Investment *
Rents Closer to Break Even CF * If CF is neg, enter this amount in the Total Monthly Income to get closer to $0 cash flow *

OWNER OCCUPIED
Old Mortgage New Mortgage $ Savings % Savings
(Negative New Monthly Mortgage means Rents MORE THAN PAY FOR Mortgage)

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