Investment Evaluation
ROI analysis is must for any real estate investment but if you are interested in buying a Los Gatos home for rental income you will need to do some serious math since the Median Sale Price of homes in the past 90 days were $1.47 Million dollars! Unless you are buying these home for cash, that is a lot of money to recover using rental income. One way to evaluate these purchases is a neat iPad or iPhone App called Property Evaluator and is from a company called Wasatch Digital Media Inc.
This FREE app offer Purchase Analysis, Buy and Hold Strategy after the users enters the information about a specific property. The App offers a maximum of 3 Expense categories which might not be sufficient if you anticipate a lot of different expenses after you purchase. Also, the hold period analysis is restricted to 5 years. The category of expense for the Free Version are:
- Cleaning & Maintenance (0.8% of the purchase price)
- Insurance (0.5% of purchase price).
- Taxes (1% of purchase price)
The Assumption Sections has the following information which can be modified:
- Appreciation Rate: 3%
- Vacancy Rate: 8%
- Income Inflation: 3% (We had to change this one since incomes have been stagnant for the past 10 years)
- Expense Inflation: 3%
- LTV for Refinance: 70%
- Closing Costs:
- Currency:
- Area Units: Sq Ft
- Compounding Period : Monthly
It was neat to enter a test property in Los Gatos for a purchase price of $1,000,000 with an equity of $250,000. The app offers 1st and 2nd mortgage input that users can add for the purchase of purchase analysis. The app offers 3 levels of upgrade options which are:
1) Pro Version at $39.99
2) Premium Version $19.99
3) Premium-to-Pro $19.99
The best part of app is the Buy and Hold Projections that in Year 20 with a projected Rental Income of $5,000 per month from this Los Gatos home, the market value of the property would be $2,257,639 offering the buyer an equity of $1,784,987. This is valuable information to have on each property for an investor who is interesting in Holding a property for rental income.
Let us know if you have used this application and what your experience has been.