1-4 UNIT PROPERTIES | INCOME PROPERTIES | APARTMENT BUILDINGS
Income and investment properties are measured against the market by using the concepts of gross rent multiplier and capitalization rate.
GRM: Total gross annual rents/purchase price = GRM
Cap Rate: Net operating income/purchase price = Cap Rate
The most common investment pitfall in residential income properties is when owners use single family homes, town homes, or condos as income properties. Even when cash flow is positive, single family residential properties inevitably carry a lower cap rate and therefore offer lower income returns. In these situations, the guarantee of realized returns should be analyzed against future price growth potential, then balanced with the goals of each property owner.
We offer a simple, user friendly spreadsheet that allows you to instantly analyze any potential income property to see if it provides the percentage income returns you deserve as a property investor.