This month we look at a 5 unit multi-family property that sold in the Glebe, we've compared this to 6 unit building that sold in Hintonburg.
Smaller investment properties with 2-4 units:
There has been a total of 178 smaller buildings sold this year, versus 175 that sold last year, so not much change in the number of sales.
The average price for a smaller building, which includes Duplex, Triplex and Fourplex's...is $519,352. The average price is down by 2.6%.
Smaller buildings are taking 38 days to sell and sellers' are getting 96% of their list price.
Larger buildings with 5 and more apartments:
52 larger properties have sold this year, versus 44 last year, so an increase of 18% there.
The average price for a larger building is now at $1,100,000, down from last year by 12%.
These are selling in 48 days and sellers' are getting 95% of their list price.
Glebe 5 unit property versus a Hintonburg 6 unit property:
Here are the numbers for 2 recent sales of larger buildings, One in The Glebe and the other in Hintonburg.
The Glebe is an upscale neighbourhood and Hintonburg is seen as an up-and-coming neighbourhood.
The Glebe 5 unit building:
This property was Fire Retrofitted and listed for $825,000. It sold for $5000 more than asking price, which suggestes more than 1 offer was presented.
- The NET income was $27,700.
- Total Expenses were $23,000.
- The CAP Rate here was 3.3%.
- Operating Expense Ratio was 45%
- This property sold for 16.4 times the gross income and 30 times the NET Income.
The operating expenses are quite high here and so is the selling price !
If you had 35% downpayment, or $290,000, and took out a mortgage for the remaining $539,000, your yearly mortgage payments would be $30,600.
Your cash flow over the year will be -$2,930 and the R.O.I. here would be -1%.
So, with 35% down here, you will lose money.
Hintonburg 6 unit property:
This property was listed for $750,000 and sold for $700,000. It was NOT Fire Retrofitted.
- The NET income was $31,500.
- Total Expenses were $35,000.
- The CAP Rate here was 4.5%.
- Operating Expense Ratio was 53%
- This property sold for 10.5 times the gross income and 22 times the NET Income.
If you had 35% downpayment, or $245,000, and took out a mortgage for the remaining $455,000, your yearly mortgage payments would be $25,839.
Your cash flow over the year will be $3,600 and the R.O.I. here would be 2.3%.
So, with 35% down here, you will make a small profit...Yeah !
We will let you decide which building wins here.....every investor has different criteria and both of these buildings did sell. Some want the best Cap Rate, some want a good solid building and some just want the highest income. There's also long term holders versus shorter term investors.
Give us your comments....let's talk !