Multi-Family Investment Calculator

The Multi-Family Investment Calculator analyzes a multi-unit property by computing income, expenses, and financing to determine your cash flow and key return metrics. The calculation starts with gross potential income. This is the total rent the property would generate if all units were occupied for the full year. It multiplies the average monthly rent per unit by the number of units and by 12 months. For a four-unit building with $1,200 average rent per unit, the gross potential income is $57,600. Next, the calculator applies the vacancy rate to estimate realistic income. A 5% vacancy rate on $57,600 produces $2,880 in vacancy loss, yielding an effective gross income of $54,720. This figure represents the income you can realistically expect to collect. Operating expenses are calculated using the operating expense ratio, which represents total operating costs as a percentage of effective gross income. Operating expenses include property taxes, insurance, maintenance, repairs, management fees, utilities, and reserves. A 45% expense ratio on $54,720 equals $24,624 in annual operating expenses. Your net operating income is the effective gross income minus operating expenses, which in this example is $30,096. The cap rate is calculated by dividing the NOI by the property price. This metric lets you compare returns across properties regardless of financing structure. For the financing analysis, the calculator computes the monthly mortgage payment based on your down payment, interest rate, and loan term using standard amortization. Annual debt service is the monthly payment multiplied by 12. Your annual cash flow before taxes is the NOI minus the annual debt service. The cash-on-cash return divides this cash flow by your total cash invested, which is the down payment plus any closing costs.