Boise Investment Properties

Quick and Easy CAP Rates

capi7215 — Wed, 02 Nov 2011 23:18:16 +0000

You may hear the term CAP Rate (CAP Rate = NOI ÷ Price) from time to time, especially when evaluating rental properties for sale. You may already know what it is, why it’s important and how to calculate it. But, do you know how to estimate a CAP rate in less than 10 seconds? If not, here’s a quick tip for estimating CAP rates that may save you a lot of time when sizing up your next potential investment property.

One of the more time consuming tasks when evaluating a properties CAP rate is determining the net operating income (NOI) or total income minus total expenses (excluding debt service). The rental income estimate is usually easy enough assuming you follow the market but what about those expenses? The only true way to determine the properties NOI is by detailing each line item expense, including taxes and subtracting for vacancy; otherwise known as a Proforma. Though time consuming, these proformas offer the most accurate financial picture of a properties net income.

However, if you’ve done enough of theses proformas, sooner or later you’ll notice a pattern. Most residential investment property expenses, taxes and vacancies account for ⅓ of their income, on average. The bulk of them coming in between 31-35%. So to quickly estimate the NOI, all you would have to do is subtract four months of annual income or multiply eight months of rental revenue. For example, a single family home renting for $1,000/mo should have a Net Operating Income (NOI) close to $8,000 ($1,000 x 8 months).

Now that we have a quick and easy way to estimate the NOI, calculating a properties CAP rate is a snap. Remember that the NOI ÷ Price = CAP Rate. So if a single family home rents for $1,000/mo and is selling for $120,000, the CAP Rate would be 6.7% ($8,000 ÷ $120,000). How about a fourplex collecting $2,200/mo going for $220,000? It would have an 8% CAP Rate ($17,600 ÷ $220,000).

Of course, nothing substitutes the accuracy of a CAP Rate that comes from a real proforma, but before investing the time and due diligence, check it out with a Quick CAP rate and see if it’s worth your time. Having a quick and easy way to identify a good investment property will help you find the right deal even faster. And as with any good deal, they usually don’t last long.

Resident Retention and How It Saves You Money!

capi7215 — Tue, 05 Apr 2011 01:25:35 +0000

Studies have shown that the average tenure for a resident at a rental home is nine months or less and this could be costly for your investment.

Some specialists have estimated that it costs five times as much to re-rent a home as it does to keep an existing resident. Add the average cost to turn a unit, advertise the vacancy and a months lost rent. Multiply that result by the national average for resident turnover of 60%. This will give you an estimate of what vacancies could be costing you annually.

Let’s take an average 3 bedroom apartment renting at $695. Add the average turn cost of $300-$500 as well as advertising. Multiply the result by 60% and you have a potential $2000 annually in lost revenue from turnover. It’s a lot cheaper to keep residents happy.

Residents can be demanding with high, but generally reasonable expectations. They expect their grounds to be neat; their appliances, lighting and plumbing to work; their parking problems resolved; and a sense of being home. When there is a problem, they want management to be empathetic and everything resolved quickly with the minimum amount of inconvenience to them.

Service and convenience are the major reasons that customers choose rental housing. We continually strive to give our residents great customer service whether it be through fun contests or simply acknowledging requests in a timely manner.

Maintenance Requests – These should always be handled quickly and must be done right the first time. This not only saves you money, but not handling requests quickly is the leading cause of resident dissatisfaction. By making repairs quickly and correctly this alone can keep your resident from looking for a new rental.
Provide Excellent Service – By creating a warm relationship with residents, asking questions and getting to know them, this lets residents know we’re happy to have them as residents. They should be treated fairly and consistently while letting them know that they are not just another rent roll.
Resident Contests & Newsletters – Offering fun incentives and contests help to keep residents involved with our community and company. In December we had our annual

Miracle On Idaho Street

capi7215 — Sat, 13 Nov 2010 19:44:43 +0000

The holidays are quickly approaching and here at Capital Group we are getting excited to see the seasons change and once again share laughter, memories and of course tons of yummy food with friends and family. With all there is to be thankful for, we wanted to pause and tell you about a wonderful organization that is giving so many less fortunate families in the Treasure Valley something to be thankful for too. And best of all, you can be a part of it!

‘Tis the season of giving and we love to give back to our community. What better way than to volunteer for Old Chicago’s “Miracle on Idaho Street”? For the 7th year, Old Chicago and their extraordinary volunteers put together an amazing holiday benefit that helps spread holiday cheer to over 800 homeless and displaced citizens of the Treasure Valley.

As the guests arrive they will receive a warm welcome and a heaping plate of pizza, pasta, salad and breadsticks. After dinner they will be escorted to the Rose Room for gifts and necessities to help them through the winter months. Gifts usually include school supplies for the kids and warm jackets for all. There is face painting, music, coloring and of course Santa Claus!

So join us at Capital Group in helping Miracle On Idaho Street be a great success this holiday season. If you’re interested in volunteering your time for this event, there are shifts available in the morning and evening. If you can’t make the date but still want to participate, a small donation (starting at $10) would go a long way in helping make this holiday season special for many Treasure Valley families. Please follow the link below to volunteer or donate today! Happy holidays to you all.

Miracle on Idaho Street

Dana Browning is Capital Group’s Office Manager and she is as passionate about serving her community as she is our customers. For more information about this event or others in our community, contact Dana at drohman@capitalgroupco.com or by calling the office at 208-639-1717

Now That’s Just Crazy…

capi7215 — Fri, 22 Oct 2010 19:14:50 +0000

Last time mortgage interest rates were as low as they are now, you could buy a gallon of gas for 19 cents! You may have heard that “interest rates are historically low” and that it’s a great time to take advantage of it by buying a home, but what does that mean? Some of you may consider it mumbo jumbo jargon, but knowing what the interest rate is and what it means to you can be extremely helpful both now and for years to come.

“Interest Rate” simply means the percentage of money you are charged in order to borrow money.

Just consider that only 5 years ago the interest rates were at 6% and now they are at a rock bottom 4%. That may not seem like a big difference but take a look at how a lower interest rate will decrease the mortgage payment for a typical newer 3bd/2ba 1200 SqFt home in Nampa for sale right now at $78K:

	2005	Today
Interest Rate	6%	4%
Monthly Payment*	$682/mo	$564/mo

Now, keep in mind, in 2005 there was no way you could find a nice, newer home in Nampa for $78K… now there are plenty of nice homes you can find under $100K. Ada County might be a bit higher but not by much; the same three bed two bath home in Ada County is going for under 120k!

Here are some examples of purchase prices compared to the monthly mortgage payment at 4%:

	100K	120K	$150K
Monthly Payment*	$564/mo	$678/mo	$847/mo

Since interest rates are at record lows, there’s only one way for them to go and that’s up! Take advantage of these rates today by calling me anytime at 208.353.8898 with questions or more information on real estate and buying a home. I look forward to hearing from you soon!

If you are interested in playing around some more with interest rates, there is a mortgage calculator on our website in the buyers section. Just put in the price of the home and the loan amount and it will tell you how much your payment would be. Have fun!!

*Monthly Payments assume: 3.5% down on an FHA thirty year fixed loan, 4% or 6% interest rate, 1.25% property tax, 0.5% mortgage insurance and $200/yr homeowners insurance policy

Real Estate Investor Report: Third Quarter 2010

capi7215 — Fri, 15 Oct 2010 23:10:15 +0000

Here we are in the last quarter of the year and the real estate market is looking great for investors looking to take advantage of record low interest rates and attractive prices! Sales edged down a little in the 3rd quarter coming off an increase in the 2nd quarter of 2010 (most likely due to the first time buyer tax credit).

According to the Intermountain MLS, sales prices are beginning to stabilize in Ada County but are continuing to decrease in Canyon County. However, thanks to a stable rental market, Ada and Canyon County continue to offer great investment opportunities. Here are some of the 3rd Quarter 2010 averages for newer homes and apartments that you might be interested in:

Average Price Mortgage Payment* Average Rents

Ada County

Single Family (3/2) $111K $625/mo $850/mo

Multi-Family (4plex) $232K $1,271/mo $2,400/mo

Canyon County

Single Family (3/2) $78K $432/mo $750/mo

Multi-Family (4plex) $187K $1,031/mo $2,200/mo

With the prices as low as they are, rents remaining stable and interest rates at rock bottom, it couldn’t be a better time to invest in real estate.

*Mortgage Payments assume: 20% down on a thirty year fixed loan, 5% interest rate, 1.25% property tax and $200/yr renters insurance policy ($400/yr policy for multi-family properties)

Free Money??

capi7215 — Wed, 15 Sep 2010 23:12:21 +0000

You know the old saying: you can’t get something for nothing, right? Well, the Neighborhood Stabilization Program (NSP) says you can! This national program began giving away interest free money over a year ago, yet many people still haven’t heard of it.

NSP was established by HUD for the purpose of stabilizing communities that have suffered from foreclosures and abandonment. They do this by offering buyers up to 20% or $40,000 in down payment assistance with NO interest payments. Ok, so the money isn’t free (you have to pay it back when you sell) but the interest is! That could mean up to $200 off your mortgage payment each and every month.

Several homes are available throughout Ada and Canyon County with 100% financing using this program. That means you don’t have to come up with any money up front to buy a house! And with interest free money, maybe you can get something for nothing, right?

It’s time to take advantage of this great market. Call me today at 353-8898 to learn more about this program and how it can help you!