What Metrics Do You Use? - Multi-Family Specific

7 Replies

In regards to multi-family properties only in the 2-15 unit sized properties, day in and day out, what metrics/ratios do you use when analyzing a potential deal or determining how long to keep a property/when to sell?

Congrats on asking one of the shortest questions requiring the longest answer ever posted on BP, :)

Search this forum and study the replies and comments as to due diligence, market analysis, valuation and return, leverage, vacancy, maintenance and expenses incorporated to an expected return on your investment. Drill down to specific areas, like the micro-geographical aspects as to location and market, that in itself is a book of discussion, you have volumes to be addressed here. Don't make is so hard on us, LOL :)

Promotion
Avail
Landlording made easy.
Best-in-Class Platform for DIY Landlords
List unlimited units, screen tenants, draft and sign leases, and collect rent—all free.
Use Avail—Free!
Originally posted by @Andrew L. :
I have searched this site. Please direct me to the thread.

Andrew,

It's not going to come wrapped with a bow on it.

Have a look a Brandon Turner's buy-n-hold analysis tool for a start. You could also give Frank Gallinelli's blog a scan. Finally, you can search the terms Bill listed above in the forums and you will find days ... nay, weeks, worth of reading material.

@Andrew L. I highly recommend Frank Gallinelli's book. I just completed reading it. The book will have everything you are looking for in regards to ratios and metrics.

http://www.amazon.com/Every-Estate-Investor-Financial-Measures/dp/0071603271

Or you can search various threads and peice together the information you want. Mr. Gallinelli's book is a concentrated, straight forward guide to what you're looking for to analyse properties.

For analyzing a deal you can Google Ray Alcorn's article on, "What's It Worth - Deriving Your Capitalization Rate." If you read and understand that it will get you 95% of the way there. From there you can use some of the sample spreadsheets on BP in the Resources section for more detailed analysis.

Regarding when to keep what you have or sell it that is going to depend largely on your goals. There will be a ROE versus cash flow tradeoff here and I agree that Frank's book specified above is a good place to start.