I’ve said from time to time I’d like to profile some real estate related Web sites. Here’s one I found recently Krunching.com. The site was founded by Time VanDermyden, a real estate broker who says most agents don’t have a clue how to analyze investment properties. I take a slightly different position than Tim. (That’s him the photo). I think Realtors do know how to analyze homes from an investment perspective, but they don’t because if they did most homes would look like lousy investments.
Residential properties tend to sell for higher prices per square foot than retail or office buildings. That’s because the people who buy commercial property are calculating the purchase price based on what they earn back on the property. The banks that lend to them are also doing so based on the rent the property can generate. With homes it’s a different model. A house is an emotional purchase, not an economic one. A mortgage loan is backed by the income of the borrower. You make your money when you sell, years down the road.
Enough me blathering, VanDermyden’s idea is to analyze homes based on their projected rent. He launched the site a year ago and right now the data is just for California but VanDermyden says he hopes to roll it out for other states where foreclosures are running high and investors are swooping in. The service costs $39 a month, although some of the analysis can be found for free on the Web if you Google a particular address.
Krunching gives you data you won’t find on most other sites such as who the owner of the mortgage is, what the interest rate on the loan is and when it’s due. This can be useful if you’re negotiating a short sale and you want to see how desperate the bank or the owner is. The other key piece of data is the estimated rents for the market. With tools on the site you can calculate projected rents, management fees, operating costs and vacancies and give yourself an estimate for cash flow. Krunching.com then gives you a thumbs up or down on the property as an investment.
Although a subscription to Krunching.com may not be for everyone, I give VanDermyden a thumbs up for the concept!