Breaking down the financials from the sale of this 9 unit building

Here is the financial analysis from the sale of this 9 unit building from the Lowertown neighbourhood in Ottawa. This property was fire retrofit. List Price was $2,999,000 and it sold for $3,050,000

Notable numbers from this sale:

  • Scheduled rental income was $181,980
  • Effective rental income of $176,521
  • Operating expenses were $37,815
  • Total operating expenses were $55,467
  • Net Operating income was $121,054
  • Operating expense ratio of 31.4%
  • Sold for 17 times the gross income
  • Sold for 25 times the Net Income

With a 35% downpayment of $1,067,500, the mortgage amount would be $1,982,500, which would cost this buyer $9,380 per month, or $112,650 yearly as the annual mortgage payments.

This gives us a cash flow of $8,404 per year, or a return on this investment of 0.79%. Is this a good deal, someone thought so, and it does have a positive cash flow with a 35% downpayment.