Multifamily real estate investing is very rewarding, and investing in a multifamily property can teach you many valuable lessons when starting your process. Using sites like Zillow, Trulia, and the MLS to find multi family listings will help, and using this multifamily investment strategy to calculate your strategy will help. This presentation shows the benefits of multi family investing calculations when buying multi family residential real estate. #multifamily #realestateinvesting #mls #multifamilylistings

1. MULTI FAMILY
Residential Real Estate Calculations
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2. The benefits of owning a multifamily investment property
are rewarding. However, many people forget or don’t
know how to calculate essential figures that can
enhance their multifamily investment strategy.
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3. These Calculations Include
1.Gross Operation Income
2.Total Operating Expenses & Expense Ratio
3.Net Operating Income (NOI)
4.Capital Expenditures
5.Cap Rate
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4. Investment Property Information
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Property Type: FourPlex
Each Unit: Two Beds Two Bath
Purchase Price: $517,000
Rental Price/unit: $1,625
Laundry Facility Income: $150 per month
Yearly Vacancy: 5%
Yearly Property Taxes: $3,725
Yearly Insurance: $2,700
Yearly Maintenance: $840
Yearly Management: $9,600

5. Gross Operating Income
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The outcome of deducting the credit and vacancy losses from
a property's gross potential income

6. CABADATA
Gross Operating Income
Example 1
Rental price for each Unit: $1,625
Laundry Facility yearly income: $1,800
Vacancy 5%
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4 x $1,625 = $6,500 x 12 months = $78,000 (Gross Potential Income)
Vacancy - 5%
Total Rental Income $74,100
Yearly Laundry Revenue + $1,800
Gross Operating Income $75,900
(Total Operating Income)

7. Total Operating Expenses
are all required expenditures associated with operating and maintaining the
investment property.
Expense Ratio
or (OER) equals the investment's operating expenses divided by its revenues and
measures the costs of running a piece of property versus the income it generates.
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8. CABADATA
Total Operating Expenses &
Expense Ratio
Yearly Property Taxes: $3,725
Yearly Insurance: $2,700
Yearly Maintenance: $840
Yearly Management: $9,600
Total $16,865
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Total Operating Expense $16,865
Divide ---------
Total Operating Income. $75,900
Expense Ratio: 22.22%

9. Net Operating Income (NOI)
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NOI equals all proceeds from the property, minus all
necessary operating expenses.

10. CABADATA
Net Operating Income (NOI)
Total Operating Income: $75,900
Minus
Total Operating Expenses: $16,865
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NOI = $59,035

11. Capital Expenditures:
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Capital expenditure, or sometimes called "CapEx" are
the funds used to enhance or repair the property.

12. CABADATA
Capital Expenditure
Take 0.75% to 1% of the purchase price. For simplicity we’ll do 1%
This is a yearly savings towards nonrecurring expenditures
Purchase price x 1% = $5,150
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*** Bonus ***
Subtract the capital expenditure from the NOI to calculate
The NOI after reserves
$59,035 - $5,150 = $53,885 (first year NOI)

13. Capitalization Rate (Cap Rate):
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The capitalization rate, usually known as cap rate, is a rate that
supports the evaluation of a real estate investment.

14. CABADATA
Capitalization Rate (Cap Rate)
Using the Net Operating Income and the Purchase Price
NOI / Purchase price
$53,885 / $517,000 = 10.42%
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15. CABADATA
When searching for a multifamily investment
property, apply these calculations. Knowing
how to calculate these simple formulas will
program your mind to think like an investor.