Comparative Market Analysis Tip for Real Estate Investment Property

click to enlargeA Comparative Market Analysis (or CMA) is a commonly-used real estate report regularly created by real estate professionals for the purpose of establishing the market value of property based upon the sales activity of comparable properties in the general area.

If you ever listed a house for sale with a real estate broker, chances are good that the listing price of your house was based upon based a comparative market analysis.

The idea is straightforward. The CMA helped the broker determine a fair market price for your house based upon the recent sale prices of similar residential properties in and around your neighboring area.

Fair enough.

Unfortunately, however, sales of comparable properties don’t tell you as much about real estate investment property sales as they do about single-family residences.

There is generally an adequate supply of house sales of similar size to draw data from and make comparisons. Real estate investment property typically suffers from the lack of enough comparable property to be meaningful. For instance, how many strip malls would you expect to find that recently sold that exactly match the square footage of a strip mall you’re trying to set a value for in the same market area?

To overcome this shortcoming, your comparative market analysis for these types of investment properties then must consist of some additional factors to make your research a bit more productive.

In this article, I want to show you two factors you can add to your CMA when working with real estate investment property.

1. Price per Square Foot

You can examine the selling prices per square foot to see if you can discern a trend. This way at least you are given the option to consider the sale of any commercial real estate based upon price per square foot and compare them to your property regardless of overall size.

2. Gross Rent Multiplier

Another consideration is to look at each property’s annual gross rent by using what is called the gross rent multiplier. The computation is simple: You just divide the property’s selling price by its annual gross rent.

For example, if an apartment building with gross rents of $80,000 sold for $480,000 the gross rent multiplier would be 6.0. So if the rental property you’re interested in has an income of say $100,000 you could figure a ball park fair market value of $600,000 (gross income x gross rent multiplier).

You can find sale prices and property dimensions in the public records from the tax assessor and city clerk. There are also a growing number of Internet sites that collect information about commercial properties sold and for sale. And of course, brokers actively engaged with investment property always accumulate this type of data and should be willing to give you this information if you ask.

Rule of Thumb

A comparative market analysis by itself is seldom going to tell you enough to make an investment decision about buying or selling. A CMA is useful insofar as it provides a “feel” of the market, and you are certainly encouraged to create one for your individual real estate analysis.

Bear in mind, though, that a comparative market analysis is just one small step leading up to the more important evaluation of the real estate investment property’s income stream.

So You Know

ProAPOD provides two real estate investing software solutions that enable you to quickly create a CMA.

 

Tips In Acquiring Properties To Turn Into A Rental

What may be causing this?

  • You are attempting to access this page via a Webhosting Account
    • Scripted access to public pages is not allowed.
  • You are accessing the web via a proxy.
    • If you are using a public proxy, you may wish to switch to another or disable it. If you believe your ISP is using a transparent proxy, please let us know.
  • You or someone on your network is running a bot to crawl our site.
    • Please contact your Network Administrator if you believe this to be the case.

We just need you to enter a Captcha so we can confirm that you are a person and not a bot.


Elaine Bernabe – EzineArticles Expert Author

Rental Property Repairs: Who’s Responsible For What?

One of the many duties that landlords have to face is making sure that the rental property is livable before they rent it out. There are also rules and regulations regarding the condition of the property that should be followed to the letter. It is also the responsibility of the landlord to make sure that any major issues with the property should be repaired as soon as it has been made known to them by tenants. The tenants though also play a big role in keeping the property in good condition.

Since tenants can also be responsible to make repairs to the property, it could be quite challenging for the uninitiated landlord to determine what repairs needs to be done by the tenant and which ones would the landlord be responsible for. We will look at these things in depth in this article.

Normally, the bigger and more important things would be the duty of the property owner. For instance, if the structure of the property would need repair, it is only important that the landlord should move as swiftly as possible to have it corrected. Without a structural problem being prepared as soon as possible, it could lead to even bigger problems.

Heating and hot water system problems, especially in cold places also fall within the circle of duties of the landlord. Any problem with the heating system not corrected as soon as possible could be used as a reason by the tenant to demand reduced rent for the days when the heating was off after the problem has been made known to the tenant. When attempting repairs, something could go wrong that could result to damage to the property. It would be the duty of the landlord to make amend to the additional damage sustained.

On the other hand, it is also the responsibility of the landlord to make sure that the tenants would understand that they too have their own responsibilities where repairs to the property are concerned. Any repairs to the property that the tenant should be responsible for is always included in the rental agreement so make sure that yours has a clause which would cover this issue.

Every small problem can lead to bigger and costlier problems if not repaired as soon as possible. For the landlord, it is important as it is a form of protecting their investment. On the other hand, where tenants are concerned, it is important that they make necessary repairs to make their stay very convenient.

Elaine Bernabe invites you to visit Salt Lake Property Management to learn more information about Utah Property Management and how to grow your rental property business.


Elaine Bernabe – EzineArticles Expert Author

Guidelines to Succeed in Commercial Property Investment

When it comes to commercial real estate investments, there will always be enough scope to make profits regardless of the property market trends and fluctuations. But investing in commercial properties has its own pitfalls and you must therefore learn the success strategies to stay and survive and prosper.

One of the requirements for commercial property investments is developing the right contacts. When you consistently speak to more people in the commercial property market, your database will grow and that creates opportunities. You will have to cultivate contacts with a wide variety of people which include property owners, fellow property investors, prospective tenants that run businesses in commercial premises, prospective buyers/sellers looking to purchase/sell commercial property, property developers, bankers, private financiers, commercial real estate agents etc.

Please remember that commercial real estate investment is built around the business community and private home buyers cannot be your target audience. Here are some additional valuable clues to succeed in commercial property investment.

1. It is essential to continually create a database of all your important contacts and be in constant touch.

2. You must learn the art of prospecting by various means and you should be prospecting each working day of the week without hindrance.

3. Once you obtain an appointment with a prospect, your presentation should be neat, relevant and attention-grabbing. The client should develop faith in your capabilities as well as reliability.

4. Knowledge of the local property market is an absolute must and you must be thoroughly conversant with the ongoing prices, rental values, list of comparable properties, listings of other agents, and all such activities in the commercial property market.

5. Your marketing efforts should include use of the internet, and newspaper adverts, signboards, and direct contact of qualified buyers. The inquiry that you find and generate has to be immediately entered into your database.

6. Negotiation and closing skills are the key factors to succeed as the commercial property investment market can be fiercely competitive.

7. When the contract or lease is negotiated, the transaction created has to be accurately written down to avoid misunderstandings at a later date.

The old adage that ‘you get back what you put in’ applies to the commercial property market and here, there is no free lunch. Commercial real estate investing involves big money and it is not advisable to venture into it till you gain adequate experience and become familiar with all the tricks and techniques.

Needless to say, commercial real estate investing requires a lot of planning, perseverance and patience to succeed. There are absolutely no quick fix solutions. The investor must understand the local market, the latest trends in commercial real estate, in order to invest in the right kind of property at the right price.

Commercial real estate investing needs steady focus and meticulous planning of all aspects, and it is important that all documents relating to the property are carefully scrutinized.

Commercial properties are invariably high-priced properties and it is not something you can do it on your own, So, put in all efforts to identify private lenders or deal partners to help you out. A partner can provide the finance and/or credit needed to purchase a property, and you can compensate him/her by paying a fixed interest rate or a percentage of the profit.

It is advisable that you associate with experienced commercial real estate mentors who can properly guide you in dealing with buying/selling of properties. It will be unwise to lose a lucrative deal or buying a bad property because you did not understand certain key factors.

Hi, I am Lincy working for RE Mentor. We offer a different perspective on real estate investments, apartment investing and real estate coaching.


Lincy Stewart – EzineArticles Expert Author

Eviction Problems Landlords Should Be Aware Of

What may be causing this?

  • You are attempting to access this page via a Webhosting Account
    • Scripted access to public pages is not allowed.
  • You are accessing the web via a proxy.
    • If you are using a public proxy, you may wish to switch to another or disable it. If you believe your ISP is using a transparent proxy, please let us know.
  • You or someone on your network is running a bot to crawl our site.
    • Please contact your Network Administrator if you believe this to be the case.

We just need you to enter a Captcha so we can confirm that you are a person and not a bot.


Elaine Bernabe – EzineArticles Expert Author

Getting the Help You Need for ProAPOD

When you are using one of ProAPOD’s real estate analysis software solutions help is just a mouse-click away. After opening ProAPOD solution simply go to the ProAPOD toolbar (not the Excel toolbar) and click Help then Online Help. This will open the online Help file for your specific real estate investment software solution (i.e., Agent 6, Investor 4, Executive 10). The file is filled with helpful tips and recommendations sure to get you started with the software on the right foot.

1) Overview – This explains the icons placed on your desktop during installation and how to use them, how to access the program from your computers Start menu, how to uninstall the software, and how to use the program.

2) Getting Started – Some helpful recommendations when using ProAPOD for the first time and starting your first project.

3) How to Save Your Work – Insights how to “Save” and “Save As” as well as the identity of the directory where your files are saved (in case you want to bypass the icons and open them directly).

4) How to Email a Report – Instructions how to print your real estate analysis reports in PDF format and email them.

5) Help with each form – Instructions on how to complete each form are given. Plus, a sample screenshot for each form is provided so you can see an actual completed form. Preview a sample screenshot

The Help file has recently been updated for Agent 6 and Executive 10 and we are working on updating the file for Investor 4. So take advantage of the online help ProAPOD provides for each of its real estate investment software solutions right from the program, or, course, always feel free to contact us directly.