Thought I was going to finish 2020 empty handed, tough real estate market out here.

Managed to snag a great deal at the last minute and wanted to share the details.

Here’s how I analyze multifamily real estate investment opportunities

The property was a vacant 4plex, listed for $990k & after a few back and forths, the sellers accepted $950k with no finance condition.

Sellers were an elderly couple who neglected the property, it needed a lot of work. It was in a great neighbourhood/location.

(more pics later)

I first calculated my total equity investment required to acquire and stabilize the property.

During the inspection, did a full walk through with a trusted contractor (worked with for years), receiving quotes unit-by-unit.

Estimated time to complete = 4-6 months.

Next is the stabilized P&L.

Since I know the area very well, I can estimate rents and opex with great accuracy (I have another property within 15 mins walking distance).

Tenants are responsible for hydro/gas.

Finally, I put together the key metrics in evaluating the deal.

I look for yield above 15%, cash on cash above 7% and debt service above 1.5.

As you can see, the numbers check out.

Bull case - I’m also looking into adding a 5th rental unit, which if feasible, should cost $50k to $75k to construct & generate $13k to $15k in annual gross rents.

This would improve all of my metrics. But even if it isn’t feasible, the base case is good enough for my criteria.

I never speculate on either asset appreciation or future rent increases in my models or decision making criteria. I plan on holding very long term.

But if cap rates on stabilized properties remain around the current 3.5% to 4% range, the property could be worth $1.56m to $1.78m.

For more details on this deal, along with more pics and an explanation on how my real estate investing strategy has evolved, check out my blog post.

I also post free content on investing and personal finance, so be sure to subscribe! https://jayvas.com/my-latest-real-estate-deal-and-how-my-strategy-has-changed/

Regarding deal sourcing, it was sent to me by a local broker who I have a relationship with.

Regarding financing, no investors or LPs and mortgage is 1.8% with 30 year amortization.