How to Calculate the Financials and Cap Rates on a Residential MultiFamily Property. Copy this formula, plug in the numbers and see how much a Multi Family building might be worth, depending on the type of market you're in.
In this video we present the formulas involved, the definition of terms used and examples where we go through all the financials and show you how it's done.

Timestamps:
0:00 0:14 Introduction
0:14 0:24 How to Calculate CAP Rates
0:24 0:35 Calculate the Value of Property
0:35 0:53 Gross Income Multiplier
0:53 1:05 NET Income Multiplier
1:05 1:35 Scheduled Rental Income
1:35 1:58 Effective Rental Income
1:58 3:23 Example Scenario calculate the NOI
3:23 5:16 Full calculations for Example scenario
5:16 6:04 Determining the ROI for Example scenario

Patrick Walchuk shows you the ways that you can find out how much any Income Property is worth based on what you are looking for. Are you looking for a certain Cap Rate, Cash Flow or Return on Investment?

Common terms you'll find in the video are: Cap Rates, Operating Expense Ratio, Effective Rental Income, Net Operating Income and more, we give you the calculations to find each.

1. The Cap Rate is simply the Net Operating Income divided by the Selling Price.

2. To work out the VALUE of a building you divide the Net Operating Income by the Cap Rate

3. Find the Operating Expense Ratio by dividing the Total Operating Expenses by the Effective Rental Income

4. To find out how many times a building sold for, multiplied by the Gross Income you would divide the Selling Price by the Effective Rental Income

5. To work out how many times the Net Income a building sold for you divide the Selling Price by the Net Operating Income

Plug in these numbers, don't forget to allow for maintenance and bad debt, as these are real! Allow for a 35% downpayment to get yourself a positive cash flow.... (sometimes).

Use the info in this movie to do your own calculations to find out the Cap Rate, cash flow or the return on your investment to see if it makes sense on any property you have all the financials on.

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