*MULTI-FAMILY* Investors - Come Mastermind!

[Michael Hernik]

Hello everyone,

I am new to BP and am excited to meet and network with you!

Purpose?: The idea of this discussion board is to gather as many like-minded investors as possible regarding the Multi-family Market in Canada.

Who?: Anyone currently investing, interested in investing or is transitioning from single-family to multi-family property investing.

What?: The idea of this is to mastermind and share tips, tricks, what's working, what's not working, market information, all related to multi-family.

So please come and join!

My story: My wife and I are currently invested in two single-family properties. I have done extensive research into multi-family and we are currently in the process of slowly transitioning to multi-family property as we feel this is the way to go in real estate.  

Goal: Really want to just get a solid group of investors together to share all things multi-family to learn and grow from our opportunities and mistakes. I would like to create a Facebook group at some point with these topics if there is interest! We are located in Saskatchewan Canada but anyone in Canada is welcome to join!

Thanks guys, talk soon!

[Michael Hernik]

Here is some gold for you guys!

Multi-family Investing Information:
Q1)How are these properties evaluated and underwritten? 
A: Based on the properties income, not comparables. Properties are valued based on a factor called a CAP Rate.
CAP Rate = Net Operating Income 'NOI' / Price of Property

Example:

$100,000 Net Operating Income on the property that is listed for $1,000,000 would have a CAP Rate of 10%.

NOI = Gross Revenue generated MINUS Gross Expenses (excluding INTEREST from the mortgage)
Example:
$180,000 of gross revenue - $20,000 property taxes - $20,000 repairs - $10,000 property management fees - $5,000 insurance - $15,000 utilities - $10,000 other expenses
NOI = $100,000

Notice that there is no consideration of both principle and interest expense on your mortgage what so ever in determining a properties NOI. Simply put, the Capitalization Rate 'CAP Rate' represents what an investor can expect to receive, assuming the property was purchased for CASH! Of course, the power of real estate is achieved using leverage so your returns will actually be higher, assuming you take out a mortgage to purchase this property. This will be discussed at a later point in time.

I hope those of you new to MF investing found this helpful