Apartment & Multifamily Lender
Valuation Ratios
http://www.
karenhanover.
com
Real estate investors looking to maximize return on investment are
usually leveraged to some degree.
They re not paying cash for properties,
using mortgages to leverage their...
More
Apartment & Multifamily Lender
Valuation Ratios
http://www.
karenhanover.
com
Real estate investors looking to maximize return on investment are
usually leveraged to some degree.
They re not paying cash for properties,
using mortgages to leverage their returns for the cash available.
What
many do not realize is that it can be easier to finance 20 units costing $2
million than to purchase a half dozen homes for the same cost overall.
It s
because lenders look less at credit scores and income from other sources,
and much more at the income or cash flow generated by the property
itself.
They do this using a couple of ratios.
Break-even Ratio
At the point the property generates enough income to surpass expenses, it
is said to “break even.
” Obviously, the sooner this happens, the better.
And, this is a function
of the rental income minus expenses.
Good marketing, tenant-pleasing amenities and friendly
management can increase rents.
But, there is a lot to do on the expense side as w
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