Financials on a 4 Unit Multi-Family Building in The Centretown Neighbourhood, Ottawa

This month we are looking at an older semi-detached, renovated property that was being used as a Fourplex, it sold in June 2017 and here are all of the financials on it. Looks very decent. The Cap Rate on this building was 4.7%.

Centretown 4 Unit Building, Sold June 2017 

Selling Price $795,000
Scheduled Rental Income (SRI) $56,100
Effective Rental Income (ERI) $53,856
Total Operating Expenses (TOE) $16,193
Net Operating Income (NOI) $37,663
Capitalization Rate (CAP) 4.7%
Operating Expense Ratio (OER) 30%
Sales Price X Net Income 21
35% Downpayment $278,250
Mortgage (@ 3.3%) $516,750
Annual Debt Service (mortgage payments) $29,346
Cash Flow $8,317
Return on Investment (ROI) 3%

From the numbers above, we mentioned that the Cap Rate of 4.7% was very good, and when we look at the Expense Ratio of 30%, this is quite low, so the buyer did quite well buying this building. Only 30% of the income will go towards the expenses.

The cash-flow at the end of the year, with a 35% downpayment was positive and that's what you like to see. This buyer has $8,317 positice cash flow which equates to a 3% return on their investment.

All-in-all this looks like it was a very good buy for the new investor.

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