Chercher une procédure par mots clés.
This functionality will allow you to calculate an approximate selling price of a property based on 6 different calculation methods.
- Annual Incomes and Expenses
Simply input the property's annual income and expenses (do not include financing fees). If you're looking at the Sale Price Evaluation page in a previously filled out analysis, simply check According to Data. Or if you're working on a new property, input the data or if you wish to have this function act independently from the Profitability analysis, simply uncheck According to Data.
- Calculation Data
6 calculation methods are available to obtain a possible Sale Price of a property. You can use the method of your choice, although we strongly recommend using the one based on the Down payment percentage because not only it ensures that you've covered the percentage required for your down payment, but will also ensure that the Debt Coverage Ratio and Cash on Cash rate are covered as well.
- Cash on Cash Rate (before taxes)
Indicates the rate of return the buyer will obtain when acquiring the property. This rate is usually determined by the potential buyer.
- Debt Coverage Ratio (also called Security Ratio)
This ratio represents the amount of times your profit should cover your debt service. Financial institutions will require a 1,20% ratio. This will insure the bank that you will be able to cover your mortgage even with if an unexpected expense occurs.
- Global Actualization Rate
The actualization rate is mainly to show that today's dollar does not have the same value as yesterday's dollar nor the same value as tomorrow's dollar.
- Down Payment (Percentage)
Represents the percentage of the down payment that the buyer will invest for the purchase of the property. In normal cases, the minimum required is 25% for uninsured mortgages.
- Down Payment (Percentage)
Represents the amount the buyer will invest for the purchase of the property. If you decide to input an amount instead of a percentage, make sure it meets your Financial Institution's minimum requirements.
- Mortgage
You can enter the information about your mortgage once your client has begun the process to purchase the property.
- Interest Rate
Represents the interest rate negotiated with the Financial institution for your mortgage. Interest rates will vary from one financial establishment to another.
- Amortization
Represents the quantity of monthly mortgage payment/total length of your mortgage
- Payment Frequency
Represents the intervals in which the mortgage payment will be done.
- Compound Interest
Indicates the frequency at which the interests will be multiplied. For Canadian mortgages, the interests will be compounded semi-annually, while in the United States, they are normally compounded on a monthly basis.
- Results
By clicking on the calculator icon, iAnalyzeREI displays the results of every calculation method. If you want to obtain a price average for the different methods used, you simply have to check the box below the method's name, at the top of each row. This will prompt the selected methods to be printed on the Sale Price Evaluation Report.
- Payment
Mortgage payment to be made based on the chosen frequency.
- Mortgage
Total amount of the loan needed to finance the purchase of the property.
- Annual Profit
The cash flow generated by the property (Income - Expenses / Financing Costs).
- Down Payment
The amount required as a deposit to purchase the property.
- Sale Price Evaluation
Approximate selling price of a property based on the annual gross income, expenses, financing scenario and requested rate of return.
- Debt Coverage Ratio and Down Payment - Method
This calculation method needs to meet two criterias: Debt Coverage Ratio and Down Payment. Please note that it is very important to validate the percentage of the down payment because it could not meet the Financial Institution's minimum required.
- Debt Coverage Ratio and Down Payment Proportions - Method
This second method combines two interesting criterias. You will need to indicate the required values (Debt Coverage ratio at 1,2% and the minimum down payment of 25%). This method will thus meet the minimum requirements of your Financial Institutions.
- Details of the Sale Price Evaluation
- Overall Discount Rate = (M x f) + (E x y) /= (0,75 x 0,06979) + (0,25 x 0,10) = 0,0773 = 7,73%
See details below
- M
: Proportion of the mortgage according to the value of the property (ex. 75 %)
- f
: Mortgage annual refund factor.
ex: A 25-year mortgage with a 5% interest rate compounded semi-annually, paid monthly. f = 0.06979
- E
: Proportion of down payment to value of the property (ex. 25%).
- y
: Yearly rate of return (equity return), (ex. 10%).
- Details for Calculating f :
- i
= interest rate = 5% = 0,05
- n
= total number of payments = 12 annual payments x 25 years = 300
- p
= actualized interest rate = (1 + i/2)1/6 - 1 = (1 + 0,05/2)1/6 - 1 = 0,0041239...
Monthly mortgage repayment factor = p / (1 - (1 + p)-n)= 0,00412/(1 - (1 + 0,00412 )-300)= 0,005816005 ...
Yearly mortgage repayment factor = monthly mortgage repayment factor x number of annual payments = 0.005816005 x 12 = 0.06979
- Sale Price Evaluation as set by Debt Coverage Ratio:
Example:
Net Annual Income = $24 000
Desired Rate of Return = 10%
Debt Coverage Ratio = 1,2
Mortgage amortized over 25 years, with a 5% interest rate, compounded semi-annually and monthly.
Annual Mortgage Rate =
| Net Annual Income | = | 24 000$ | = | 20 000$ | | Debt Coverage Ratio | | 1,2 | |
Amount of mortgage payments =
| Annual mortgage price | = | 20 000$ | = | 1 666,67 | | Amount of Annual Payments | | 12 | | Annual Profit = Net Annual Income – Annual Amount of the Mortgage =
24 000$ - 20 000$ = 4 000$
Down Payment =
| Annual Profit | = | 4 000$ | = | 40 000$ | | Desired Rate of Return | | 0,10 | |
Actualized Interest Rate
p = (1 + i/2)1/6 - 1 = (1 + 0,05/2)1/6 - 1 = 0,0041239 ...
Annuity =
| p | = | 0, 0412 | = | 0,005816005... | | (1 - (1 + p)-n) | | (1 - (1 + 0,00412 )-300) | |
Total Mortgage Amount = | Amount of Payment | = | 1666,67$ | = | 286 563,91$ | | Annuity | | 0,005816005... | |
Sale Price Evaluation = Total Amount of Mortgage + Down Payment = 286 563,91$ + 40 000$ = 326 563,91$
Sale Price Evaluation as set by Down Payment ($40 000):
Annual Profit = Desired Rate of Return x Down Payment =
0,10 x 40 000$ = 4 000$
Annual Amount of Mortgage = Net Annual Income - Profit =
24 000$ - 4 000$ = 20 000$
Amount of the mortgage payments =
| Annual price of the mortgage | = | 20 000$ | = | 1 666,67 | | Number of Annual Payments | | 12 | |
Actualized Interest Rate
p = (1 + i/2)1/6 - 1 = (1 + 0,05/2)1/6 - 1 = 0,0041239 ...
Annuity=
| p | = | 0, 0412 | = | 0,005816005... | | (1 - (1 + p)-n) | | (1 - (1 + 0,00412 )-300) | |
Total Mortgage Amount = | Amount of Payment | = | 1677,67$ | = | 286 563,91$ | | Annuity | | 0,005816005... | |
Sale Price Evaluation = Total Amount of Mortgage + Down Payment = 286 563,91$ + 40 000$ = 326 563,91$
Sale Price Evaluation as set by Overall Discount Rate:
Sale Price=
| Annual Net Income | = | 24 000$ | 310 300,23$ | info@deguara.com | | Overall Discount Rate | | 0,0773... | |
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