The GRM is useful in providing a rough estimate of value. Take a look at the Cash Flow Statement for the Sample 1 property. It will take you about four years to recover your down payment via After-Tax Cash Flows with the assumptions that were provided for the Expense Growth Rate and the Income Growth Rate. Your cumulative After-Tax Cash Flow dollars go from a negative amount to a positive amount in 4 to 5 years. You can then multiply .25 times the market value to determine the equity amount.
Mortgage insurance is a premium amount which is added to the monthly mortgage payment.
For example, you have owned an investment property for a number of years and you would like to refinance the property to take cash out. Overestimating the appreciation growth rate can distort Future Wealth. Once you've narrowed down your property selections, you may want to run low, medium and high appreciation growth rate scenarios through the model. This will give you a range of Future Wealth possibilities. Back to Menu x The Net Income Multiplier or NIM is a factor that is used to estimate the market value of income producing properties.