How To Analyze A Real Estate Deal – Winston Rowe & Associates

[Winston Rowe]

When you're considering the purchase of commercial income property you need to know as much as you can about the income and expenses before you even consider making an offer.

There are Four calculations that every real estate investor should utilize to determine a potential income property's investment quality.

They are the ensuing:

1) Gross Rent Multiplier

2) Net Operating Income

3) Capitalization Rate

4) Debt Service Ratio

Gross Rent Multiplier (GRM):

The gross rent multiplier is a simple method by which you can estim...

To Calculate the GRM:

Gross Rent Multiplier  =  Market Value  /  Annual Gross Scheduled Income

Transposing this equation:

Market Value  =  Gross Rent Multiplier  X  Annual Gross Scheduled Income

Net Operating Income (NOI):

Net Operating Income is a property's income after being reduced by ...

To Calculate the NOI:

Net Operating Income  =  Gross Operating Income less Operating Expenses

Capitalization Rate (Cap Rate):

The capitalization rate is the rate at which you discount future in...

To Calculate the Capitalization Rate (Cap Rate):

Capitalization Rate  =  Net Operating Income  /  Value

Transpose this formula to solve for the ensuing variables.

Value  =  Net Operating Income  /  Capitalization Rate

Net Operating Income  =  Value  X  Capitalization Rate

Debt Service Ratio (DCR):

Debt service ratio is the ratio between the property's net operatin...

To calculate the Debt Service Ratio (DCR):

Debt Service  =  Annual Net Operating Income (NOI)  /  Annual Debt Service

Winston Rowe & Associates really wants to be able to find a way to help everyone who comes to them find a funding solution that meets their needs.

That's why Winston Rowe & Associates actually wants to speak with clients, so they can truly understand your business and its distinct needs.

The best funding solutions occur when they combine data with consultation and common sense.

They can be contacted at 248-246-2243 or visit them online at http://www.winstonrowe.com