Quotations by Frank Gallinelli

Will the arrival of a major new employer create an increase in the demand for apartments? If so, this may be the time to look at apartment buildings. [2004] - Frank Gallinelli

In the absence of usable market data, many investors like to use a vacancy allowance in the range of 3% to 6%. An exception to this rule of thumb usually occurs in the case of a newly built project that is being leased for the first time. Vacancy during the initial lease-up period can be much higher. Conventional wisdom also has it that a property whose actual vacancy history is close to zero has probably been rented at less than market rates. In other words, if you don't experience some vacancy, you're just not charging enough. [2004] - Frank Gallinelli

You can depreciate a residential income property over 27.5 years, and a nonresidential property over 39 years. [2004] - Frank Gallinelli

Recite this mantra whenever you consider purchasing an income property: If it's not worth selling, then it's not worth buying. [2004] - Frank Gallinelli

7% of the selling price is an estimate of cost of sale that has traditionally been popular among income-property investors. This amount would presumably be sufficient to cover the legal and brokerage costs for a typical transaction. [2004] - Frank Gallinelli

Most lenders require a DCR (debt coverage ratio) of at least 1.20 in order to finance an income property. A property with a 1.20 DCR has income before debt service that is 1.20 times as much as the debt service--in other words, the property generates 20% more net income than it needs to make its mortgage payments. [2004] - Frank Gallinelli

With commercial mortgages, your personal credit is not irrelevant, but you will find that the lender is particularly interested in the ability of the property to produce income. [2004] - Frank Gallinelli

If your property is a smaller residential building (or even your personal residence), the assessor or appraiser will probably have used comparable sales rather than income capitalization to establish value. [2004] - Frank Gallinelli