Property Valuation

Sometimes, a fresh objective opinion is all you need...

When it comes to investment property, performance is all that matters. Provided below are some examples of ways to evaluate the Performance Of A Property. 

Need a  Broker Price Opinion (BPO)? For a reasonable fee, we'll do the research and provide a market performance analysis report for your property. 

Annual Property Operating Data (APOD)

An annual property operating data sheet is a detailed cash flow statement based on estimated income and expenses over a twelve month period. It includes proposed financing figures and a potential before tax cash flow. It may also, for the purpose of calculating potential cost recovery (depreciation), show the allocation of value between land, improvements, and personal property. The information contained in this report can be used by investors and their financial advisors to determine the suitability of an investment.

IEIP has demonstrated the consistent ability to reduce operating expenses for income producing properties owned by small, medium and large investors. An IEIP analysis of one to two years of operating expense history typically brings to light areas where greater efficiencies can be achieved. 

We are aware of many unique expense aspects involved with smaller multifamily income properties as compared to medium to larger properties... the IEIP team is well versed in the trouble spots typical associated with multifamily income properties and the appropriate expense levels to run them. This experience will help you We can assist and train property owners on budget development and cost savings procedures.

Real Estate Investment Analysis Software   Simple  Fast  Powerful

Proforma Analysis

Though it is an opinion or estimate, the potential income a property owner can experience is the goal of a Proforma Analysis. Typically, a Proforma Analysis is compared to current or actual performance of a property. Sometimes referred to as a Property Data Sheet as mentioned in the valuation analysis, accurate data is very important. 

Market Rent Analysis

Most property owners understand the importance in having up-to-date rental market information. As a standard service to IEIP clients, IEIP conducts rent market research on surrounding income properties which would be most comparable to the subject property. These market surveys determine market rent terms for comparable properties in the area so to best determine the current and proforma performance of a property along with its relative marketability.

Valuation Performance Analysis

Determining the value of income property is achieved by using the Gross Rent Multiply (GRM) method, Capitalization Rate (Cap Rate) method, Cash on Cash (C/C) method and Debt Coverage Ratio (DCR) method. 

GRM Method

The GRM method is a quick and easy because it uses the information from Gross Scheduled Income in a typical cash flow model. Typically, the value of an investment property can be determined by multiplying a specific gross rent multiplier by the properties expected first year gross scheduled income. The higher the GRM, the higher the asking price. But that's not what buyers are looking for. Typically they are looking for properties with low GRMs. 

Pros: The GRM method is a convenient tool because of simplicity

Cons: GRM method is limited because it does not take into account vacancy, uncollected rents, operating expenses, debt service, tax implications as examples.

Cap Rate Method

Many appraisers and investors use the Cap Rate method to establish the value of an income property. A Cap Rate is the ratio between the first year net operating income (NOI) and the purchase price of the property. Cap Rates are market specific and can vary from neighborhood to neighborhood or even street to street. The are affected by the principles of supply and demand and can vary significantly according to perceived risk. In addition, different investor's may have different Cap Rate requirements. The Cap Rate method is also a useful tool in comparing various properties in terms of their NOI performance in specific markets. 

The lower the Cap Rate, the higher the sales price. The higher the  Cap Rate the lower the sales price. Sellers want buyers to accept the lowest possible Cap Rate but from the buyers point of view, the higher the Cap Rate, the more attractive the investment property becomes.

Pros: The main advantage of using a Cap Rate method is it's simplicity. It accounts for vacancy and operating expenses.

Cons: The reliability of using a Cap Rate is limited because it only looks at a one year forecast and does not take into consideration any financing or tax implications.

Cash on Cash Method

The Cash on Cash methods involves measuring the investors initial investment to before tax cash flow. 

Pros: Cash on Cash takes into account vacancy and uncollected rent, operating expenses and debt service. 

Cons: Cash on Cash does not take in to account anything past the first year forecast nor doe sit consider tax implications.

Debt Coverage Ratio Method

When 5 or more units are involved, lenders typically use Debt Coverage Ratio in their lending guidelines. Because income and expenses can and do vary, from month to month, lenders reduce their risk by making loans where the Annual Debt Service (ADS) is typically less than the NOI. Clearly the lenders goal is to be sure the income produced by the property is more than enough to cover the mortgage (ADS). Though lender criteria can change according to market conditions, lenders typically like DCR ratios  between 1.1 and 1.3 for low risk properties. The higher the DCR the less the lender risk.

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> Inland Empire Income Properties Description / Services / Intentions: Inland Empire Income Properties specializes in the identification, representation negotiation and closing of investor oriented income producing properties such as apartment units and multifamily income properties. IEIP also provides a full spectrum of buyer representation and seller listing service for duplex, triplex, quad, fourplex and apartment units as well as commercial, retail and industrial, business office and land for development / investment real estate in California.  Investors of such properties typically buy these income investment properties  based on cap rates, gross rent multiples (GRM), positive cash flow, rent  increase potential and or expense control as well as and 1031 Exchange investment replacement. IEIP provides these services to buyer and sellers in the Inland Empire, Riverside County, San Bernardino County, Orange County and San Diego County. IEIP also has a professional cooperative working relationships with a broad network of professional commercial real estate agents and brokers through out California and the United States. 

> Inland Empire Income Property Serves San Bernardino County California and the following cities: Adelanto, Apple valley, Barstow, Big Bear Lake,  Chino Hills, Chino, Colton, Fontana, Grand Terrace, Hesperia, Highland, Loma Linda, Montclair, Needles, Ontario, Rancho Cucamonga, Redlands, Rialto, San Bernardino, Twentynine Palms, Upland, Victorville and Yucaipa. Inland Empire Income Properties also serves these unincorporated communities in San Bernardino: Big Bear City, Bloomington, Bluewater, Cadiz, Crestline, Lake Arrowhead, Lytle Creek, Mentone, Morongo Valley, Mountain View Acres, Muscoy, Newberry Springs, Nipton, Phelan, Pinon Hills, Running Springs, Wrightwood, Yermo and Yucca Valley.

> Inland Empire Income Property Serves Orange County California and the following cities: Aliso Viejo, Anaheim Hills, Anaheim, Brea, Buena Park, costa Mesa, Cypress, Dana Point, Monarch Beach, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, Irvine, La Habra, La Palma, Laguna Beach, Laguna Hills, Laguna Niguel, Laguna Woods, Lake Forest, Foothill Ranch, Los Alamitos, Mission Viejo, Newport Beach, Balboa Island, Corona del Mar, Newport Coast, Orange, El Modena, Olive, Placentia, Rancho Santa Margarita, San Clemente, San Juan Capistrano, Santa Ana, Seal Beach, Stanton, Tustin, Villa Park, Westminster and Yorba Linda. Inland Empire Income Properties also serves these unincorporated communities in Orange County: Coto de Caza, Dove canyon, Ladera Ranch, Las Flores, Orange Park Acres, Santa Ana Heights, Silverado Canyon, Sunset Beach, Trabuco Canyon and Tustin Foothills.

> Inland Empire Income Property Serves San Diego County California and the following cities: Carlsbad, Chula Vista, Coronado, Del Mar, El Cajon, Encinitas, Cardiff-by-the-Sea, Leucadia, Olivenhain, Escondido, Imperial Beach, La Mesa, Lemon Grove, National City, Poway, Oceanside, San Diego, San Marcos, Santee, Solana, Beach and Vista. Inland Empire Income Properties also serves these unincorporated communities in San Diego County: Agua Caliente Springs, Alpine, Barrett, Blossom Valley, Bonita, Bonsall, Borrego Springs, Bostonia, Boulevard, Camp Pendleton North, Camp Pendleton South, Campo, Canebrake, Crest, Cuyamaca, Dehesia, De Luz, Descanso, Dulzura, Eucalyptus Hills, Fairbanks Ranch, Fallbrook, Fernbrook, Flinn Springs, Granite Hills, Guatay, Harbison Canyon, Hidden Meadows, Jacumba, Jamul, Julian, La Presa, Lake Morena, Lake San Marcos, Lakeside, Live Oak Springs, Manzanita, Mount Laguna, Pine Hills, Pine Valley, Portero, Pueblo Siding, Rainbow, Ramona, Rancho San Diego, Rancho Santa Fe, San Diego Country Estates, San Elijo, Santa Ysabel, Shelter Valley, Spring Valley, Tecate, Tierra delSol, Valley Center, Vallecitos, Warner Springs and Winter Gardens.

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