Created specifically for buyers searching for Multi-Family properties; our proprietary search software provides users with reliable and unbiased financial breakdowns of all properties listed on the MLS in real-time. Enabling them to quickly search and analyze dozens of properties in minutes and empowering them to make an informed and educated decision whether or not they want to continue evaluating a property or eliminate it from the search altogether.
GLOSSARY OF TERMS USED IN THE FINANCIAL CALCULATIONS
Gross Scheduled Rent is based off the fair market rents for each town; according to number of bedrooms and overall square footage. We gather our data from multiple sources including the following MLS, Craigslist, Rent.Com, and US Department of Housing and Urban Development along with a few other websites.
Less 5% Vacancy – typically investors would not include a 5% vacancy loss for 2-4 unit rental properties but we would rather be conservative in our approach.
Other Income could be generated from on-site laundry services, or other rent-able property that’s located on site such as garage, etc.
Insurance is based off the number of units and the location of the property. Using several insurance companies, we’ve calculated the numbers by using the worst possible scenario per the city or town.
Taxes are calculated using the most recent Department of Revenue property tax schedule for each town/city.
Principal & Interest is based off buyer putting down a minimum of 20% and assuming an average interest rate based off today’s interest rates.
Water & Sewer is guesstimated based off the size of the property and the overall location. This number is an estimate.
Trash Removal is different in every city and town. We typically leave this at $0 but of course you can adjust accordingly.
Management Fee typically 2-4 units are managed by the owner and therefore they do not pay themselves a fee, however if you have a portfolio of properties than it might make sense to take advantage of the economies of scale.
Maintenance/Repairs always a good idea to put money away into a maintenance and repairs fund in case something breaks and you need to repair, this amount is subjective but typically anywhere from 5 to 10% per month of the rent roll.
Net Operating Income is calculated by taking the proposed annual rent roll less the operating expenses (not including the debt service). This figure represents your profit before mortgage payment.
Debt Service (Mortgage Payment) is your annual principal and interest payments. Again in our calculations we always assume at least 20% down payment, so by default your financing 80% of the asking price.
Potential Net Cash Flow is the profit left over after all your operating expenses and the debt services. Some investors like to take this money and apply towards the principal to pay the loan down quicker and some investors like to reinvest this money into another property.
Cash on Cash Return is your Return on your Investment. This is calculated by using the aforementioned Potential Net Cash Flow over your Down Payment (your initial Investment). Typically more desirable areas have low ROI but higher appreciation in value. And the less desirable areas have higher ROI yet don’t have the high appreciation. Each investor is different and has different goals and objectives. Some prefer investing in less desirable areas and some only invest in highly desirable areas. Some would argue that its all relative.
Cap Rate is calculated by taking the Net Operating Income (income before debt service) over the Sales Price. This will give you your Return on Investment without considering your debt service (mortgage payment).
Condo Conversion Equity is calculated by taking the average Condo square foot sales price in that city/town and then multiplying that price by the total livable square footage for the entire Multi-Family property. Then we subtract the sales price and this amount represents the potential condo conversion equity. NOTE: This does not factor in any renovations that might be needed or condo conversion costs but it will give you an idea on the properties potential.
Disclaimer: We do not guarantee that the numbers provided are 100% accurate, that’s just crazy. BUT, we are saying these are in fact rough estimates that you can use to help make an informed decision on whether or not you’d like to continue to learn more about the property or eliminate a property. If the numbers look good, then there’s a pretty good chance the numbers are good. But of course we recommend doing your own due diligence and/or have a one of our premier investment specialist do the leg work for you. There are just too many factors beyond our control that can affect any of the projected numbers listed in any property on our website. Such factors beyond our control include but not limited to: Financing Terms, Tax Rates, Overall Condition of Property, Investors ability to operate and manage property and tenants effectively.