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Housing in 2018: Where Are Home Values Headed?

Housing in 2018: Where Are Home Values Headed?

via Housing in 2018: Where Are Home Values Headed?

Meeting about an assisted living facility we have under contract with a potential investor who has "8 million" currently earning a "guaranteed 5%", the inevitable subject of overvaluation came up, to which my response was, not quite.

Buoyed by many positive trends, such as the nation's first Olympic museum, projections of our being the nation's cyber security capital, expansion of direct flights to and from the Colorado Springs airport and more, there's also this:

 

http://www.corelogic.com/about-us/researchtrends/corelogic-home-price-insights.aspx?WT.mc_id=crlg_171205_C6yzN#

Historically just a few years behind the Denver MSA, which may have plateaued as of this writing, it seems the Colorado Springs market has up to 5 years of upswing left.

Specializing in locating, analyzing, acquiring and management of quality rental assets, we are standing by and have significant experience helping investors build long-term wealth with real estate. Please contact us at 866-6REALTY or 303-242-2980 for the personalized attention you deserve.

Investment Analysis and Net Operating Income

Investment Analysis and Net Operating Income

via Understanding Net Operating Income in Commercial Real Estate

Investment Analysis

No one has a crystal ball. However, to "make your money when you buy", real estate investment analysis requires a careful look at variables, perhaps most important being projected gross income, at the time of purchase.

Net Operating Income

The amount left over after subtracting expenses from gross income, Net Operating Income (NOI) is crucial. Using a formula known as IRV with the income capitalization approach, NOI helps us to find value as follows:

Net operating income (I) ÷ capitalization rate (R) = value (V)

To find NOI, use income and expense statements for the subject and similar properties to first estimate the potential gross income, then subtract vacancy and collection loss. From this, estimate expenses and subtract them from the effective gross income.

Cap (Capitalization) Rate

Similar to a rate of return, the capitalization rate is the percentage investors hope to get from an investment. With as little information as recent sales data for comparable properties, the formula used to find Cap Rate is as follows:

Net operating income (I) ÷ Sales price (V) = Cap rate (R)

Local Expertise

Together with expert market knowledge, this analysis helps us make reasonable projections that help our clients make informed purchase decisions every time.

Reach out to us for a consultation, we look forward to serving you.

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