How are multifamily properties valued?

They are valued through the income method (must be 5+ units for this method). Basically taking the NOI divided by the market cap rate to determine the value of the property. See the above example

What is a cap rate and why is it important?

It is your NOI / Purchase Price. It is a good benchmark indicator of how the property is performing

How do you determine the market cap rates?

By talking to local real estate investment professionals, lenders and property managers. Each neighborhood will vary.

How long does it typically take from finding a property to closing?

We typically see anywhere from 30 - 60 days depending on the size of the asset, due diligence period and whether you are paying cash or using financing.

Does it matter if I pay cash or use financing?

Both are good options depending on your situation and goals. Please click here to speak to one of our real estate investment professionals to get more clarity on how to best pursue your next investment property.

What are typical expense ratios?

Multifamily properties and single-family portfolios tend to differ a little. For multifamily properties, we use an average expense ratio of 50%. For single-family portfolios, we see an average of 40%, but these will also vary depending on the asset and whether the tenant or owner is paying for what expenses (ie. which utilities).

Where do you find properties?

Our primary way to source properties for our clients is a system we have put together that collects off-market investment properties, direct-to-seller. This gives you the added benefit of having exclusive properties available that are not on the market. In addition, we have very strong local relationships that allow us to see a lot of off-market inventory before they hit the market. Of course, we also have access to the MLS for on-market deals.

Why multi family over single family investing?

Simply put, economies of scale. When one person moves out of a single family unit, you’re at 100% vacancy. If you have a 10-unit apartment building, for example, you’re only at 10% vacancy. If you plan to do renovations and increase the value of the property, you can truly multiply your money with the higher unit count. For example, when you increase the rents by $100 for 10 units, that’s an additional $12,000 increase to your NOI. You take that divided by the market cap rate, which, let’s assume is 8%. This equals an $150,000 increase in the value of your property just by the economies of scale.

Can I invest from out of state or internationally?

Yes, absolutely! This is no problem - we work with clients around the world, both nationally and internationally. We have local lenders that we work with that lend to out-of-state and international investors. There are some additional hurdles for international investors who do not have US citizenship, however, we work through those to acquire properties and have done so many times in the past.