🤝 How to Make Meaningful Connections at REI Events
Happy Monday!
Here is an Idea, an Action, and a Question to consider this week.
Idea
If you’re comfortable with the lingo in real estate investing, congratulations! You’ve set yourself up for success. When you go to meet-ups, conferences, and networking events, you can now engage in meaningful conversations. This will allow you to meet interesting people and make fruitful connections.
If you have gaps in your REI lingo, you need to address them. If you don't, you'll be relegated to a wallflower at meet-ups, conferences, and networking events, unable to truly participate.
Learning the lingo is something I’m passionate about. I think it makes a massive difference in your ability to be successful. So let’s do it! Today’s REI term is…
Gross Rental Income
Gross Rental Income (GRI) stands as an important initial indicator for an investment opportunity. It represents the total income from a rental property before any expenses are deducted. This figure includes all rental payments and any additional income sources related to the property, such as laundry facilities, pet fees, parking fees, etc. By analyzing the GRI, investors can quickly gauge the relative health of a property and compare it to others in the market, laying the foundation for more in-depth financial analysis and investment decisions.
Furthermore, the GRI can help an investor discern between properties in terms of profitability. It provides an initial overview, allowing for the assessment of the property's current revenue-generating situation versus the potential income it could make with your recommended changes. Again, GRI doesn’t consider expenses like maintenance costs, taxes, and property management fees.
Also, GRI is an especially valuable metric when evaluating multi-unit properties, as it aggregates the revenue from all units, giving an immediate snapshot of the property's current earning status.
If you want to up your lingo game, sign up for my free Learn the Lingo Email course. I’ll send you a short email with a meaningful term every three days for a month. By the end, you’ll feel more confident in the REI space.
Action
Conduct a comparative market analysis (CMA) focusing specifically on rental properties:
Select a Specific Area: Choose a well-defined geographical area. It could be a particular neighborhood or a type of property within a city.
Gather Data on Rental Properties: Collect data on rental properties in this area. Focus on properties that are similar in size, type, and amenities.
Analyze Rental Rates: Document the monthly rental rates for each property. This will give you the gross rental income for each property on a monthly basis.
Identify Factors Influencing Rental Rates: Note any factors that seem to influence the rental rates, such as location, property condition, nearby amenities, or market trends.
Calculate Annual Gross Rental Income: Multiply the monthly rental rate by 12 to get the annual gross rental income for each property.
Compare with Sales Prices: If possible, compare the gross rental income with the sales prices of the properties. This will help in understanding the yield or return on investment.
Prepare a Report: Compile your findings into a report. This should include a summary of the rental rates, the factors influencing these rates, and any trends or patterns you've noticed.
Reflect and Analyze: Reflect on what you've learned about how various factors affect rental income and how this might influence investment decisions or property valuations.
Question
How often do you practice deal analysis?
See you next week,
Matt “Roar” Gardner
Real estate investor-agent, Author of Supersonic Real Estate: Light Your Afterburner to Accelerate Your Investor-Agent Career (Coming Soon!), and keynote speaker.
