If you're a multi-family or commercial investor, DealCheck offers advanced tools designed specifically to analyze these types of properties.
This tutorial will show you how to analyze multi-family or commercial properties with our rental analysis tools. If you're analyzing single-family homes, read this guide instead.
Adding a New Property
Step 1: Click the "Add Property" Button from the Property List
Navigate to the rentals list and click the Add Property button at the top right:
Step 2: Select the "Enter Manually" Option
Our software allows you to import property data from the MLS or copy an existing property, but in this tutorial we'll add the property manually and explain all of the parameters you can customize along the way.
Select the Enter Manually option to launch the step-by-step wizard:
Step 3: Fill in the Property Description
The first step is to enter basic details about the property, including a name, property type and address. Except for the property type, all of the fields here are optional, so you can fill in as many details as you want.
Here are the most important fields to fill in:
- Name: this will be the name of the property used throughout our app. Some people simply use the property's address, while others like more creative names, like "10 Unit in North County, 90% Occupied".
- Property Type: select either Multi-Family (for 2-4 unit properties) or Commercial (for 5+ unit properties). This is necessary to turn on advanced multi-family and commercial analysis tools for this property.
- Address: enter the address of the property to view it on the map, as well as to access its MLS records later.
- Details: enter any of the basic home facts that you know about this property, including year built, parking, lot size, zoning, etc.
Step 4: Customize the Rent Roll
Click the Customize button next to the Unit Mix label at the bottom of the page to open the rent roll worksheet:
This is where you can enter a detailed rent roll for this property and customize the number, types and gross rent of the units in this building.
Click the Add button at the top right to add a new unit type:
And fill in the following fields:
- Number of Similar Units: enter the number of units in this category. If you want to enter units in groups, enter in the number of units in this group. If you want to enter each unit one at a time, leave 1 in this field.
- Bedrooms: select the number of bedrooms in each unit.
- Bathrooms: select the number of bathrooms in each unit.
- Square Footage: enter the square footage of each unit. We'll use this to calculate the total square footage of the building for you.
- Gross Rent: enter the total gross rent you expect to collect from each unit. You can also change the rent collection period, if needed.
Repeat the above process until you've entered all of the units that comprise your multi-family or commercial building. For example, if the building consists of 6 studio apartments and 6 2/1 units, your unit mix worksheet will look something like this:
Click the Back to Worksheet button at the bottom of the page once you've finished entering the unit information:
Then click the Next button at the bottom of the page to continue to the next section:
Step 5: Enter the Purchase Information
The next section describes the property purchase.
Here is what you should customize:
- Purchase Price: the amount you're paying to purchase this property.
- After Repair Value: the estimated market value of the property after any rehab work is complete. If no repairs are necessary, the after repair value is the same as the current market value.
- Financing: if you're going to use financing to purchase this property, enter the details of your loan in this section, including the loan type, interest rate and term. Disable financing if this is a cash purchase.
- Purchase Costs: these are all costs and fees associated with purchasing the property, also called closing costs. Examples include loan points, escrow fees and property inspection fees. You can enter a total amount as a percentage of the purchase price, or click the Itemize button and enter a detailed list of each purchase cost separately. You'll notice that each purchase cost can be applied to the whole building or to each unit.
- Rehab Costs: if you're planning to do any up-front rehab work on this property, enter the total or an itemized list of all rehab expenses. Leave this as $0 if the property is already rent-ready.
Click the Next button at the bottom of the page to continue to the next section:
Step 6: Enter the Cash Flow Information
Use the Cash Flow section to enter the vacancy rate and any miscellaneous income, as well as all operating expenses you're going to have.
First, customize the rental income:
- Gross Rent: since you've already entered the rent roll for this property earlier, the gross rent field will show the total monthly rent for the entire building. Click the Rent Roll button if you need to change the rent for any of the units.
- Vacancy: every property is going to have some downtime. Enter the percentage of time you expect the property to remain vacant here.
- Other Income: use this to enter any miscellaneous income you expect to receive from this property, like storage rental, coin-operated laundry or parking fees. You can enter a monthly total or itemize the list.
Next, customize the monthly and yearly recurring expenses. You can enter an estimate as a percentage of the gross rent (useful if you're doing a quick analysis using the 50% Rule), or itemize expenses one at a time:
When itemizing expenses, you have several options on how to enter each item:
- As a monthly or yearly amount - good for fixed costs
- As a percentage of the purchase price - for things like property taxes
- As a percentage of the gross rent that either accounts for vacancy or ignores it - for maintenance, management or capital expenditures
- As a single expense for the entire building or as an expense applied to each unit
Click the Next button at the bottom of the page to continue to the next section:
Step 7: Customize Other Assumptions & Projections
The final section of the wizard has several additional inputs and projections you can customize to further fine-tune this deal:
- Land Value: the appraised value of the land, excluding any structures or improvements. Entering the land value will improve the accuracy of the depreciation deduction.
- Appreciation: the anticipated annual increase of the property's market value. This is important to calculate how the property's value will increase in the future.
- Income Increase: the anticipated annual increase of the gross rent and any other income. In most cases the property's rent will increase each year and this is the percentage it will increase by.
- Expenses Increase: the anticipated annual increase of the operating expenses. Expenses will typically rise due to inflation and other factors.
- Selling Costs: an estimate of the costs and fees associated with selling this property, also called closing costs. We use this as part of the ROI calculation.
When finished, click the Save Property button at the bottom of the page to add this property to your account:
Tip: You can save a lot of time by customizing the default presets that are used for all new rental properties. Read this help article to learn how to do this.
Viewing the Property's Analysis
Now that you've added this property, you can view a full breakdown of the purchase requirements, cash flow and investment returns on the Analysis Summary page:
Tip: Hover over the question mark icon next to any metric to view its description and calculation formula.
You'll notice that many metrics, like the NOI and cash flow, will show a total amount for the entire building, as well as a per unit amount below it.
If you need to edit any of the parameters of this deal later, go to the Worksheet page from the property menu on the left side:
Viewing Long-Term Buy & Hold Projections
While each property's Analysis Summary page shows the numbers for the first year, you may want to see how this property will perform in the future as well.
Click the Analysis Projections link from the menu on the left side to view buy & hold projections for up to 35 years:
By default, this page will show projected numbers for years 1, 2, 3, 5, 10, 20 and 30. You can view projections for all years by toggling the dropdown at the top right:
Tip: Scroll the data table left and right to view information for additional years.
Once you've added a new multi-family or commercial property, it will remain in your account and you can come back to it at any time from the property list:
Here are some other things you can do with this property:
- View the property's MLS listing
- Create and export a complete property report
- Calculate the highest price you can offer on this property
- Check this property against your purchase criteria
- Compare this property with other potential investments
- Copy this property to quickly analyze alternative scenarios