Investment Evaluation

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:

  1.  Cleaning & Maintenance (0.8% of the purchase price)
  2. Insurance (0.5% of purchase price).
  3. 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.

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