San Jose is the largest metropolitan city in northern California, it represents one of the best markets to find investment properties. But what tools will you need to analyze the investment properties? All you will need is your Smart Phone and the an app called Property Evaluator.
One of the great features of this app is that it’s Free! Developed in Utah by investor turned entrepreneur Joel Grasmeyer, the app offers very quick and easy way to evaluate a property for cash flow analysis. The iPad version of the app was updated in July 11, 2013 which is good good indicator of the developers commitment to add new features.
This app allows you to create very detailed analysis of the property before you make purchase decisions. This app offers Purchase Analysis in addition to Buy and Hold Strategy after the users enters the information about a specific property. The Free version of the Property Evalutor offers users up to 3 Expense categories to add which might not be sufficient if your holding period is going to be longer than 5 years. But for a quick analysis is sufficient start.
The category of expense for the Free Version are:
1) Cleaning & Maintenance: The app’s default value for cleaning and maintenance is 0.8% of the purchase price. These values can be entered per month or per year.
2) Insurance: Default value of 0.5% of purchase price. You will need to adjust this since with an average price of $1M, you will get very high insurance premium costs which would impact your ROI analysis.
3) Taxes : The default value is set to 1% of purchase price which you can adjust based on the tax rates which are at 1.5% in Santa Clara.
The Assumption Sections has the following information which can be modified:
1) Appreciation Rate: 3%
2) Vacancy Rate: 8%
3) Income Inflation: 3% (We had to change this one since incomes have been stagnant for the past 10 years)
4) Expense Inflation: 3%
5) LTV for Refinance: 70%
6) Closing Costs:
8) Area Units: Square Feet
9) Compounding Period : Monthly
It was neat to enter a test property in San Jose 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 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 San Jose 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.
Have you used this app!? Let us know what you think?