Multi-Unit Property Analyzer
Comprehensive analysis for duplex, triplex, fourplex, and apartment buildings.
Multi-Unit Investment Analysis
Analyze the investment potential of multi-family properties with detailed cash flow projections, key performance metrics, and per-unit economics.
Property Details
Income
Typical range: 5-10%
Monthly Operating Expenses
Investment Analysis
Income Analysis
Operating Expenses
Net Operating Income
Key Investment Metrics
Per Unit Economics
Investment Quality
Poor
May not meet investment criteria
Understanding Multi-Unit Metrics
Cap Rate
Measures property return based on NOI. Higher is better. Target: 8%+ for most markets.
Cash-on-Cash
Annual cash flow divided by total cash invested. Measures actual return on your capital. Target: 8-12%+.
DSCR
Debt Service Coverage Ratio. NOI ÷ debt payments. Lenders want 1.25x+. Higher means safer investment.
How to Underwrite a Duplex, Fourplex, or Apartment Building
Multi-unit properties are valued and financed differently from single-family rentals: the numbers, not the neighborhood comps, drive the price. This analyzer walks the same waterfall a commercial underwriter uses. Gross scheduled rent is reduced by a vacancy allowance to get effective gross income; operating expenses (taxes, insurance, management, maintenance, utilities) are subtracted to get net operating income (NOI); and the mortgage payment comes out last to leave cash flow. From those figures it derives the four metrics every lender and serious buyer will ask about: cap rate (NOI divided by price), cash-on-cash return (annual cash flow divided by cash invested), debt service coverage ratio (NOI divided by annual mortgage payments), and the operating expense ratio.
The discipline the waterfall enforces is separating the property from the financing. NOI and cap rate describe how good the building is regardless of your loan; cash-on-cash and DSCR describe whether your particular financing structure works. A great building with too much leverage still fails.
A Worked Example
Take an eight-unit building in a Midwest market listed at $760,000 ($95,000 per unit) with units renting for $1,350. Gross income is $10,800 per month; at 8% vacancy, effective gross income is $9,936. Monthly expenses run $3,494: $900 property tax, $350 insurance, 10% management ($994), $600 maintenance, $450 owner-paid utilities, and $200 other. That leaves an NOI of about $6,442 per month, or $77,300 per year, a 10.2% cap rate.
With 25% down ($190,000) and a $570,000 loan at 7% over 30 years, the mortgage payment is roughly $3,792, so monthly cash flow is about $2,650, or $331 per unit. Annual cash flow of $31,800 on $190,000 invested is a 16.7% cash-on-cash return, and DSCR comes in near 1.70, comfortably above the 1.25 minimum most lenders require. Those numbers would rate as excellent; if the same building were priced at $950,000, the cap rate would drop to 8.1% and the cushion would shrink fast, which is exactly the sensitivity this calculator lets you test before you write an offer.
Expense Assumptions Make or Break the Analysis
Most bad multifamily purchases trace back to optimistic expense assumptions, not bad buildings. Seller pro formas routinely omit management (budget 8-12% even if you self-manage, because your time has value and lenders underwrite it anyway), understate maintenance on older buildings, and quote last year's property taxes rather than the reassessed amount after your purchase. A healthy operating expense ratio for stabilized multifamily typically lands between 35 and 50 percent of effective gross income; if your inputs produce 25 percent, the more likely explanation is a missing expense than a miracle building.
Frequently Asked Questions
What is a good cap rate for a multi-unit property?
It depends on the market, but many investors target 6 to 8 percent for stabilized multifamily, with 8 percent or higher generally considered strong. Lower cap rates are normal in appreciating coastal markets, while smaller Midwest and Southern markets often trade at 8 to 10 percent. Compare against recent sales of similar buildings in the same submarket rather than a single national benchmark.
What DSCR do lenders require on multifamily loans?
Most commercial and DSCR lenders want a debt service coverage ratio of at least 1.25, meaning net operating income is 25 percent higher than the annual mortgage payments. A property at 1.0 breaks even, and anything below that requires you to feed it cash monthly. Stronger DSCRs above 1.4 can also earn better pricing on the loan itself.
Why do investors analyze multi-unit deals on a per-unit basis?
Price per unit and cash flow per unit make buildings of different sizes comparable. A $760,000 eight-unit at $95,000 per unit can be judged against a $450,000 fourplex at $112,500 per unit even though the totals differ. Per-unit cash flow also exposes thin deals: a building clearing $2,000 per month sounds healthy until you realize it is only $80 per unit with no cushion for surprises.
What vacancy rate should I assume when underwriting?
Five to ten percent is the standard planning range, with 8 percent a reasonable default for most markets. Use a higher figure for buildings with month-to-month tenants, heavy planned renovations, or soft submarkets, and remember that vacancy includes turnover downtime and non-payment, not just empty units between leases.