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 multifamily and commercial properties with our rental analysis tools, but you can also analyze them as BRRRRs or flips.
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 public records 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:
Tip: you can save a lot of time by customizing your property templates and using one of them when adding new properties. Read this guide to learn how to do this.
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"
Tags & Labels: you can add custom tags and labels to this property to help you categorize it, track its status and quickly find it later
Address: enter the address of the property to view it on the map, look up sales & rental comps, as well as to access its public records later
Property Type: select either Multi-Family (for 2-4 unit residential properties) or Commercial. This is necessary to turn on specific multi-family and commercial analysis tools for this property
Description: enter any of the basic home attributes that you know about this property, including year built, parking, lot size, zoning, etc.
Step 4: Customize the Unit Composition & Rent Roll
Click the Edit button in the Unit Composition section at the bottom of the page to open the unit composition & 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 group:
Next, fill in the following fields:
Number of Similar Units: enter the number of units/spaces in this group. If you want to enter units in groups, enter the number of units in this group. If you want to enter each unit one at a time, leave 1 in this field
Unit Type: select which type of unit this is from the available options
Unit Label: enter an optional label for this unit/space group to distinguish it from others
Bedrooms: for residential units, select the number of bedrooms in each unit
Bathrooms: for residential units, 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 in this group. You can also change the rent collection period, if needed
Repeat the above process until you've entered all of the units that comprise the multi-family or commercial building. For example, if the building consists of 6 studio apartments and 6 2/1 units, your rent roll 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 Section button at the bottom of the page to continue:
Step 5: Enter the Purchase & Rehab Information
The next section describes the property purchase and rehab:
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 (Purchase): 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 Section button at the bottom of the page to continue:
Step 6: Enter the Rent & Expenses Information
Use the Rent & Expenses section to enter the vacancy rate and 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 Edit Rent Roll button if you need to change the rent of any of the units
Vacancy: enter the percentage of time you expect the property to remain vacant
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 to get more accurate projections:
When itemizing expenses, you have several options for how to enter each item:
A monthly or yearly amount: good for fixed costs
A percentage of the purchase price: for things like property taxes
A percentage of the gross rent: for maintenance, management or capital expenditures. You can choose to calculate these items either before the vacancy is subtracted from the gross rent, or after
A building or unit expense: a building expense will be calculated once for the entire building. A unit expense will be added for each of the units in the building
Click the Next Section button at the bottom of the page to continue:
Step 7: Customize Long-Term Projections
The final section of the wizard has several additional inputs and projections you can customize to further fine-tune this deal:
Here is an overview of what each of them is for:
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
Expense 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
Depreciation: use the provided inputs to customize the depreciation deduction for this property, including the depreciation period and the property's land value. You can also turn off depreciation if it's not applicable to this property
Refinancing: use this section to add any future refinance loans for this property, and model a variety of financing strategies, including a mix of short and long-term financing, future home equity loans, and hybrid interest-only and amortizing loans
When finished, click the Save Property button at the bottom of the page to add this property to your dashboard:
Viewing the Property's Analysis
Now that you've added this property, you can view a full breakdown of the purchase information, cash flow and investment returns on the Property Analysis page:
Tip: hover over the question mark icons next to any metric to view their descriptions and calculation formulas.
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 Purchase Worksheet page from the property menu on the left side:
Viewing Long-Term Buy & Hold Projections
While the Property Analysis page shows the numbers for the first year, you may want to see how this rental property will perform in the future as well.
Click the Buy & Hold Projections link from the menu on the left side to view buy & hold projections for up to 35 years into the future:
By default, this page will show projected numbers for years 1, 2, 3, 5, 10, 20 and 30. You can view projections for other years by opening the dropdown at the top right:
Tip: scroll the data table left and right to view information for additional years.
What's Next?
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 recent sales comps: view a list and a map of recent comparable sales to help you estimate the ARV of this property
View recent rental comps: view a list and a map of comparable rental listings to help you estimate the potential rent of this property
View public records & active listings: view up-to-date property and listing information to help you do research and watch for price changes
Calculate your max offer: use the offer calculator to calculate the highest price you can offer to the seller to meet your investment targets
Look up its property owner: view the name(s) and contact information of the current owner(s) of this property
Share a property report: create and share a professional property report with your lenders, partners or clients
Check this property against your criteria: customize your target investment criteria and see if this property meets it
Analyze alternative strategies: quickly copy this property to analyze different acquisition or financing strategies
Compare this property with others: compare this property side-by-side with other potential investments to help you find the best deals
Note: the above screenshots were taken from our website, but the same features can be found in our iOS and Android apps as well.