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www.REIClub.com – Effective Gross Income (EGI) Is An Important Number in Commercial Real Estate. Here’s How To Calculate EGI For Your Real Estate Investment… Hi, this isFrank Chen with REIClub.com, the only site you need as a real estate investor. Today I’ve got quick video on how to calculate effective gross income (EGI) for commercial real estate investing. Effective Gross Income (EGI) The amount of income produced by a piece of property, plus misc income, less vacancy costs and collection issues. Investors use the EGI to determine how much they are willing to pay for the property based on how much they expect to make in earnings. Gross Potential Rent (GPR) The expected income a property will produce when fully occupied and all rents are collected. Example 10 unit apartment $800/month $8000/year x 12 months = $96000 Other Income/Revenues – laundry facilities – vending machines – car wash centers – additional storage – personal errand services – late fees from rent – parking permits – covered parking – etc… Example: $1000/mo in additional revenue $12000/year Total Potential Revenues (Gross Income) GPR + other income = $108000/year Vacancy The vacancy rate is the percentage of all the rental units that are vacant in relation to the total amount of units in the property. (Total Vacant Units) / (Total Units) = Vacancy Rate Average vacancy rates are around 5-10% Credits Money or percentage of income that is estimated to be lost due to non-payment of rents. Also includes …
Gurgaon has been come of an edge where it has been transformed into an Electronic City from a small town. Rude red lands at the outskirt of metro city of Delhi have been evolved into a high tech commercial city being constantly under the scalpel of property developers. Consistent and contemporary construction processes taking place are creating high end commercial edifices here. Knowing that the targeted segment of property buyers and investors look for state of the art office spaces that are well equipped with high standard amenities and facilities which mostly prevail in international office spaces – office buildings house international style from exterior to interior. As a result, Gurgaon is increasingly becoming the most preferred hub of MNCs, IT, BPOs, and other types of companies.
Apart from lofty skyline with buildings carved in latest science of architecture in Gurgaon, there are some more reasons that boost up the prices of properties here. The crime rates in Gurgaon are very much in control and lowering. Other reasons why this is one of the most sought after property zone in India include connectivity of roads and highways [the expressway to Jaipur], NH8, extended route of Delhi Metro Rail connection, closer proximity from domestic airport and IGI airport etc.
Mushrooming of malls and prevailing of high quality civic amenities provide employees working at the office spaces that are nestled at the Gurgaon based commercial properties India wide options to meet their demands for good lifestyle. Not only that, fast developing residential buildings in Gurgaon help people working in Gurgaon based offices find beautiful homes to settle within shorter distances.
Numerous projects have already landed up and innumerable projects are yet to be complete and under the construction planning. Some of the major corporate buildings to make Gurgaon a commercial haven include InfoCity, IMT Manesar, Cyber Green, Pace City, Udyog Vihar etc. Developers have made available High rated projects at the same line with medium and small sized projects to meet all kind of requisition of commercial properties buying and investment along with detailed information on structural design, construction work with material, sanction of building plan, no objection certificate and completion certificate of building etc.
Ankita Tyagi is expert content writer on real estate and property India. For more details on residential and commercial property gurgaon visit:- NextGenProperty.co.in
For a while now I’ve written about the latest “change” in commercial lending: “The Small Balance Commercial Lender.” These guys are re-writing the rules on commercial loans that are less than $3 Million. While this might not impact your business immediately if you are dealing with larger properties, it will eventually affect you because of something else they are doing:
Stated Income or EZ Document Loans
Commercial lending, with the exception of private money loans, has been strictly a “full document” underwriting proposition. This meant that the borrower had to show up with a mountain of paperwork including personal tax returns, business tax returns, and financial statements in addition to the documents related to the property such as the leases, rent roll, and income and expense history. And in the end, the lender would underwrite the loan based entirely on the property’s cash flow, ignoring the borrower’s income, anyway!
These new lenders are willing to take into account the borrower’s free cash flow on a stated basis, and make their underwriting decision using the borrower’s credit score, the property’s cash flow, and the borrower’s reserve liquidity. This is unprecedented in commercial lending and will most likely force conventional lenders to come up with competing programs in the near future or they will lose too much loan volume.
Another consideration is that the investors who buy these loans will most likely increase their loan amounts in the future if they have a good experience with the smaller loans. Why wouldn’t they? It costs as much to underwrite and fund a $5 Million loan as it does a $500K one, yet the return is 10 times as much. This will put even more pressure on conventional lenders to create some kind of competing program or sell the same programs from the same investors.
So my personal take on the situation is that there will be some significant changes in the loan marketplace if the Small Balance Commercial Lender has a winning formula. They are too new to have any real experience in a down market and I’m sure that the conventional lenders will be watching them closely.
WANT TO USE THIS ARTICLE IN YOUR E-ZINE OR WEB SITE? You can, as long as you include this complete statement with it: ?Craig Higdon, ?The Investment Property Insider,? works as a commercial mortgage broker. He publishes the weekly ?Investment Property Insider? e-zine and blog, www.InvestmentPropertyInsider.com. Visit the blog and get a complimentary report on commercial financing techniques.?