Income Property Investment
What
is a real estate income property investment ("income property investment")?
In theory, anything sitting on land and generating rent would qualify. In reality, there are 3 major types of income property investments.
The first type are the apartment buildings and mobile home parks. These "multi-residential" properties are usually priced using the gross rent multiplier (GRM), which is the selling price divided by the total annual gross rent, before vacancy allowance and expenses (the higher the GRM, the lower the cash flow).
Shopping centers, office buildings and industrial parks comprise the second type and are priced based on the capitalization rate ("cap rate"), which is the lease income, less vacancy allowance and expenses, and before any effect of the financing terms (the higher the cap rate, the higher the cash flow).
This type requires dealing with commercial leases, and therefore a little more sophistication than the muti-residentials.