GRM or Cap Rates are quick and simple methods for comparing the purchase price against the income stream. These tools can also be used for measuring the strength of the market place, forecasting the immediate future for values, and most importantly determining which property provides the greatest return. The Operating Income Statement is part of every appraisal ordered on an investment property. Whether an investor purchasing a single condominium or a corporation is purchasing a 200 unit apartment building, an Operating Income Statement will be used to analyze the purchase. Since The Lending System uses this tool in analyzing investment property, it’s in your best interest to also understand and utilize the tools.
Learn about:
• Gross Rent Multiplier
• Capitalization Rate
• Operating Income Statements
• Work through examples
• The sources for information
• How to calculate profit returns
• Loan limits and interest rates for investment properties
Course Objectives
As a result of taking this class you should:
1. Have a basic understanding of common investment tools
2. Know the basic terminology used by appraisers and lenders
3. Understand how to utilize a GRM and Cap Rate
4. Know how to analyze a property for your investment buyer
5. Understand how loans differ between investment properties vs. owner occupancy
Gross Rent Multiplier (GRM), Capitalization Rates (CAP), Operating Income Statements, and Census Tracts, are the same tools used by lenders and real estate appraisers in determining the value of a property prior to a bank loan being granted. Understanding and applying appraisal/bank tools will enable you to communicate more effectively with investors and appraisers.