Private Money Investors should know their cap rates and gross rent multipliers or GRMs. Arlington Apartment Investors have many things to think about with respect to today’s private money investment opportunities. This post provides some guidance as to things to consider when looking for places to invest if you hope to receive above average returns on your investments:

Cap Rate Valuation Model

The first model is the “cap rate” which is basically the annual pre-tax net rental income from the apartment complex divided by its current market value. Generally the lower the cap rate, the better the investment.

Gross Rent Multiplier or GRM Model

Another valuation model is the “gross rent multiplier” which is the purchase price or present market value divided by the gross operating income or total rents.

If you are a private money investor looking to invest in Dallas, Arlington or Grand Prarie real estate, you must understand these valuation models and what cap rates and GRMs are standard for the areas the apartments you are going to invest in are located.

Texas Multi Family Apartments Are Primarily Sold Through Real Estate Brokers

If you are a private money investor considering an investment in Arlington apartments or apartments in the Dallas metro area, consider asking for a referral for available properties through a commercial real estate broker.

I have a list of Arlington commercial real estate brokers that I would be happy to share with you. If you are interested, call me or e-mail at the contact info below and I will send what I have to you.

Know Your Numbers

Buyers should investigate local vacancy rates, rent control restrictions, the pace of new construction, employment levels and other marketplace factors.

Rents have a tendency to go up when construction of new multi-family housing is overly expensive and there are low vacancy rates. However, rents tend to decrease when new construction becomes available and vacancy rates are increasing.

Real Estate Finance Terms Have Little To Do With Investor Credit

Why? Because virtually all Texas apartment properties are judged credit worthy by banks based on their ability to service the debt they will incur during the financing process.

If the apartment property can service the debt it will carry, then financing is much more likely than if the only financial support will be a private money investors’ credit.