Financials on a 6 Unit Multi-Family Building in The Glebe Neighbourhood, Ottawa
Here are all the financials as well as the return-on-investment on a recent sale of an Income Property that had 6 apartments in it, which was located in The Glebe, in the Central Area of Ottawa.
Glebe 6 Unit Building, Sold May 2017
|Scheduled Rental Income (SRI)||$120,768|
|Effective Rental Income (ERI)||$115,937|
|Total Operating Expenses (TOE)||$40,657|
|Net Operating Income (NOI)||$75,280|
|Capitalization Rate (CAP)||3.6%|
|Operating Expense Ratio (OER)||35%|
|Sales Price X Gross Income (ERI)||18|
|Sales Price X Net Income||28|
|Mortgage (@ 3.3%)||$1,365,000|
|Annual Debt Service (mortgage payments)||$80,064|
|Return on Investment (ROI)||-0.7%|
The Glebe is considered a Higher-End Neighbourhood and we haven't looked at the financials on a property like this for a while, so here it is.
The CAP Rate of 3.6% is average for this area, as well as the Operating Expenses, at 35%, which can be considered average to good for this neighbourhood.
This building sold for 28 times its' NET Income, which we consider to be very high.
And, at the end of the day, if you invested $735,000 into this property (as your down-payment) at 35% of the purchase price....you are taking a loss of -0.7% on that investment.
The numbers show that if you put down 35% you would lose $4,784 per year.
Remember, you will still (hopefully) have appreciation on the building as well as decreasing your mortgage every year, but this type of investment is not for everyone.
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