Evaluating a property

[Timothy Gordon]

Hello BP! Which items need to be considered when doing a quick drive by evaluation of a small multi family investment? I'm thinking PITI vs rental income, for starters. What other factors should an inexperienced investor consider, without being too overwhelmed by details that don't matter too much at this point? I have a tendency to make plans so far ahead that I over complicate the simple parts. Any advice would be appreciated.

[Ben Leybovich]

Tim, you need to know know the income and expenses. From this you can figure out the NOI. From that you can figure out the DSCR. Now, how you go about understanding how much to pay for this asset is up for debate, but you can start by figuring out the marketplace Cap Rate, discount it, and capitalize a value. This isn't exactly correct, but on a small multi you should be OK with that.

Tim, how much of what I wrote above do you understand?