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How to Analyze Multi-Family and Commercial Properties
How to Analyze Multi-Family and Commercial Properties

Create rent rolls, break down expenses by unit, calculate cash flow and long-term returns for MFRs and commercial buildings.

Cindy Bellford avatar
Written by Cindy Bellford
Updated over a week ago

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:

Add a new rental property from the property list


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:

New multi-family property wizard - enter manually button

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:

New multi-family property wizard - property description

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:

New multi-family property wizard - edit unit composition button

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:

New multi-family property wizard - add a new unit type

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

New multi-family property wizard - new unit group popup

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:

New multi-family property wizard - rent roll worksheet

Click the Back to Worksheet button at the bottom of the page once you've finished entering the unit information:

New multi-family property wizard - back to worksheet button

Then click the Next Section button at the bottom of the page to continue:

New multi-family property wizard - property description next button


Step 5: Enter the Purchase & Rehab Information

The next section describes the property purchase and rehab:

New multi-family property wizard - 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:

New multi-family property wizard - purchase and rehab next button


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:

New multi-family property wizard - rent and expenses

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:

New multi-family property wizard - operating expenses

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:

New multi-family property wizard - rent and expenses next button


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:

New multi-family property wizard - long term projections

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:

New multi-family property wizard - save property button

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:

Multifamily and commercial property analysis

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:

Purchase worksheet link in property menu


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:

Buy and hold projections link in property menu

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:

Multifamily and commercial property buy and hold projections

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:

Multifamily and commercial property list

Here are some other things you can do with this property:

Note: the above screenshots were taken from our website, but the same features can be found in our iOS and Android apps as well.

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