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Updated 2 days ago, 12/23/2024

User Stats

12
Posts
10
Votes
Craig Sparling
  • Investor
  • Chicago
10
Votes |
12
Posts

Who's got metrics for me? GRMs, CAPRates, YOY Growth, Median Income vs median rent

Craig Sparling
  • Investor
  • Chicago
Posted

I consider myself an old school fundamentals guys.  I've read about Benjamin Graham and Warren Buffets approach to investing at large and it resonates with me more so than the crypto-generation.  Real estate's "gross rent multiplier" is Wall Street's "sales to revenue",  "cap rate" is roughly "P/E ratio".

When evaluating markets and investments I tend to start with GRM (or lazily the 1% rule), then attempt to return a cap rate based on assumptions about costs, then I work my way to multiple years of projections (assumptions about inflation, amortization, tax benefits, etc), and if I am partnering with one of my smart friends I have to pull up an IRR (internal rate of return).

I also look at regional employment levels, median income to rent ratio in the zip code etc.  And here in Chicago I always check my favorite local homicide tracker whose name violates usage restrictions.

Is there other favorite metrics out there that I am missing?  Is anyone else willing to share the math-side property screening process? Is there other market wide metrics that apply here?

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