Multifamily Investing Analysis by Winston Rowe and Associates

MIAMI - Dec. 11, 2023 - PRLog -- Buying a multifamily investment.

Developing a financing proposal for a potential lender, you'll need to focus on the following.

Business Performance Metrics:

Net Operating Income (NOI)

Net Operating Income is the one metric that most investors use to analyze a property.

This is why it's important for you to do your own math.  Here's the formula for NOI:

Potential Rental Income

-Vacancy

Effective Rental Income

+Other Income

Gross Operating Income

-Operating Expenses

= Net Operating Income

Invest for the sake of cash flow, rather than making projections about potential appreciation (market or forced). As long as you follow that simple principle, you'll be protected from a lot of risk.

Occupancy

The occupancy rate is the number of units filled divided by the total number of units.  For instance, if there are 95 units occupied out of a 100-unit apartment complex the occupancy rate is 95%.

Vacancy

Absorption

For this example let's call it 3,000 with a 95% occupancy rate (2850 units rented).  Use a time-frame of 12 months.

Then find out how many units were built or demolished during this time frame.  For this example, let's say a new apartment complex was built with 300 units so the market now is at 3,300 units with a 90% occupancy (2970 units rented).

In this example, even though the size of the market grew 10% to 3,300 units the absorption was extremely high because the total number of units rented actually increased.  Occupancy rate slipped slightly however, this is the sign of a healthy market.

They always available to speak with prospective clients at 248-246-2243 or visit them on line at https://www.winstonrowe.com