This Six Unit Income Property sold in August, in Centretown
Have a look at the table below for all of the financial info on this 6-Plex from Centretown or watch the video where Pat will go through all of the numbers and let you know if they are good or bad.
Below is the table where you can see all of the numbers, and at the bottom we give you this buildings Return on Investment as well as the cash flow based on Two different mortgage rates.
Centretown 6 Unit Building, Sold August 2018
|Scheduled Rental Income (SRI)||$90,220|
|Effective Rental Income (ERI)||$86,611|
|Total Operating Expenses (TOE)||$31,089|
|Net Operating Income (NOI)||$55,522|
|Capitalization Rate (CAP)||4.5%|
|Operating Expense Ratio (OER)||36%|
|Sales Price X Net Income||22%|
|Mortgage (@ 5.5%)||$806,000|
|Annual Debt Service (mortgage payments)||$59,037|
|Return on Investment (ROI)||-0.8%|
Looking at the numbers based on a rate of 5.5%, which is common for larger income properties, this buyer would be taking a loss of $3500 per year, which is a -0.8% return on his initial investment of $434,000.
If this buyer could shop around and find a mortgage at 3,5%, which you can get on smaller buildings and some lenders will do this on larger buildings, this would change the whole scenario. The return on investment goes up to 1.7% and the buyer makes $7200 per year.
Check out some of the Multi-Family Listings we currently have for sale.