I was reading an article on investing in Single Family Home Rentals and
it gave me an idea. I wanted to do an analysis where I looked at the
average rents for a 3 bedroom in Chicago.
I broke it down by neighborhood. Then I compared that to the average
selling price for a 3 bedroom Single Family Home in Chicago, also broken
down by neighborhood.
Comparing these two results allows us to compare Revenue to Purchase price.
This is very useful information, because it lets us know which neighborhoods
offer the higher returns for investors.
Here are some interesting metrics:
Median Rent for a 3 bedroom in Chicago: $1,442
Median Selling price for a 3 bedroom home: $145,612
Average Gross Rent Multiplier: 8.14
Here is a snapshot of this report:
Single Family Rental Analysis – Chicago
We can also use the above information to estimate a property value
for a Single Family Rental in a particular neighborhood.
For example, let say that we have a single family home that is
renting for $1,000 in the Chicago Lawn neighborhood
(Neighborhood ID = 8066).
According to our analysis, the average Gross Rent Multiplier (GRM)
in Chicago Lawn is 4.40. The annual gross rent for this
property is 12 x 1,000 = 12,000. Then we multiply the annual
gross rent times our GRM of 4.4 and get $52,800.
So the value of $52,800 would be our derived value based strictly
on income. We can also look at our average comp value, which is
$57,523 in the Chicago Lawn neighborhood.
I would then average our income value and our comp value.
This would give us a value of $55,161.
Well, that’s all for now. I hope you found this information useful.
If you would like the full report, please send me a note:
mark@markkillion.com
p.s. I have packages of Single Family Rental Homes For Sale in Chicago!
Right now, I have a package of 5 homes in the Morgan Park neighborhood.
Gross Income = $72,000 Asking Price = $450,000
*** Guaranteed Returns during first two years = 12% Cap Rate ***
For more info, please send me a note: mark@markkillion.com
Until the next time,
Mark Killion
Kale Realty
542 W. Roosevelt Rd
Chicago, IL 60607
Send me a note!
Visit me online: www.773property.com
EQUAL HOUSING OPPORTUNITY
