Multifamily Worksheet
(worksheet)

Quickly evaluate property by calculating key financial metrics that give insight into its profitability and value. Here's a breakdown of each input and output, and how the formulas are used to perform the calculations:

Inputs:
 

MLS ID # - Identifier for the property in the MLS.
 

Property Address - The property location, is linked to a map in the report.
 

Asking Price - The seller's listed price for the property.
 

Down Payment - The amount or percentage of the purchase price that you plan to pay upfront.
 

Financing - Uses the interest rate and loan term to calculate debt service (loan payments). Using a second loan for value-added improvements, our worksheet lets you include it.
 

Closing Costs - Additional funds needed for the transaction, these include, but are not limited to, legal fees, transfer stamps/taxes, and title fees.  Typically around 2% of the final sales price.
 

Real Estate Taxes - Taxes on the property, either current or estimated taxes after reassessment.
 

Expenses - Ongoing costs to operate the property, including utilities, insurance, maintenance, etc.
 

Income - Revenue generated from the property, such as rent, parking fees, or additional services.

Outputs:

Net Operating Income (NOI) is the total income generated by a property, minus operating expenses (excluding debt service), which indicates its profitability.

Formula: Net Operating Income = Gross Annual Income - Annual Operating Expenses (excluding debt service)

Capitalization Rate (CAP rate) indicates the expected rate of return from a rental property. The CAP rate represents the yield of a property over one year, assuming it is purchased with cash. If the CAP rate is lower than comparable properties, it suggests that the property is priced higher than the rest of the market.

Formula: Capitalization Rate = Net Operating Income (NOI) / Property Value

Gross Rent Multiplier (GRM) values rental properties based on the annual rent collected by the building, before deducting any taxes, insurance, utilities, or other associated expenses. The advantages of the GRM metric is its simplicity and speed of calculation. However, a significant drawback is that it does not account for operating expenses. A lower GRM indicates a better value.

Formula: Gross Rent Multiplier = Property Value / Gross Annual Income

Cash-on-Cash (cash yield) measures cash flow relative to the cash invested in a property and is calculated on a pre-tax basis. Closing cost must be input for this metric to be accurate

Formula: Cash-on-Cash Return = NOI + Debt Service / Total Cash Invested

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