Multifamily Real Estate Investing Rules of Thumb from Udemy

What's inside

Learning objectives

Analyze deals and investing opportunities with more confidence and accuracy.
Understand cap rates and how to use them in their investment strategy.
Have much greater confidence in doing due diligence for an investment.

Have an accurate investment goal through cash on cash returns.
Understand property management costs and savings.

Analyze deals and investing opportunities with more confidence and accuracy.
Understand cap rates and how to use them in their investment strategy.
Have much greater confidence in doing due diligence for an investment.
Have an accurate investment goal through cash on cash returns.
Understand property management costs and savings.

Syllabus

Learn the 22 points of priority for any investors in the apartments and multifamily properties.

Welcome message from Gino

This book lays out our guidelines and parameters for a good deal. Here we discuss cap rates and cash on cash returns that we strive for. It is vital for beginning investors to learn how to correctly analyze a deal.

What formulas should I use? You will be able to analyze a deal quicker and more accurately using our Rules of Thumb. What are some of our rules?

○ Cap Rates: What is a cap rate, and how do investors use them?
○ Cash on Cash Return: What is our return that we strive for? (hint: 10%)
○ Debt Coverage Ratio: What ratio does a bank look for when deciding whether to provide financing?
○ Management Fees: What are the going rates to manage a property

Once you learn the basic rules of thumb, you will become more confident in analyzing deals, going through the due diligence phase, and putting in offers that will land you deals. You will also learn how to manage your property more effectively.

Introduction to Rules of Thumb For Multifamily Investing.

Loan to Value, the amount banks are willing to lend as a percentage of the total loan. As you will see, loan to value will differ on the type of deal you have and the amount of experience you bring to the table.

Often misunderstood, cap rates are a widely used calculation in multifamily investing that measures the rate of return on your investment. Understanding how to properly use cap rates is vital to investing.

One of the most popular calculations in among multifamily investors to calculate their rate of return is Cash on Cash. In this lesson, Gino is going to teach you exactly how to us this calculation and why it's so important.

This is a very important metric that banks use to decide whether to finance your deal. Find out what the banks are looking for and see what Jake and Gino strive for. This formula will show you if your property is generating enough income to pay the mortgage and the bills.

Do you know how much your expenses should be as a percent of your gross income? In this lesson, Gino is going to map the path for you to making certain you know the percentage of the gross income of your investments.

Capital Expenditure is one of those rules that many investors are confused by and tend to neglect. Let us show you how to calculate cap ex and give you examples why you need to set up a capital expenditure account. Don’t make the same mistake that Jake and I made, almost sidetracking our investing careers.

Mortgage Points are often confused with origination points. So, what is a loan point and should you consider points when financing a property? We will discuss origination points and show you how to lower the origination fee on a loan.

As far and Jake and Gino are concerned, knowing your management fees are among the most important elements of running a successful multifamily business. Knowing what management companies charge, and knowing if you should hire a management company or self-manage. We let you decide.

Cash Flow is the REASON why anyone should be investing in real estate. We view capital appreciation as icing on the cake. Would you buy a business that is losing money? Neither would I, and you shouldn’t purchase a property that has negative cash flow.

GRM, also known as Gross Rent Multiplier is a quick calculation to estimate a property’s value. Although it is not a very accurate calculation, it shows us if the property is vastly under or over priced and leads us to analyze the property more in depth.

A landlord hates to experience Vacancy Loss, but it is a value play to investors. We describe the benefits as well as the detriment of experiencing vacancy loss and the acceptable amount a landlord should tolerate.

Due Diligence, two of the most important words to every investor, can be a confusing process to any novice investor. Seasoned investors often overlook small details, so we assembled a checklist to follow when performing due diligence prior to closing on a deal.

Jake and I often use the Rule of 72 to calculate how long it will take us to double our money with a certain investment. Conversely, we also use the formula to show us the rate of return we have to achieve if we want to double our money within a certain time period.

How to Hold your real estate is a critical Rule of Thumb, and investors vary widely on the type of entity they use. Some investors find it wise to hold real estate in their personal names, and we will show you the benefits of creating an LLC to protect yourself.

Insurance Expenses can vary widely from market to market. We will discuss the type of insurance every property owner should purchase, as well as the cost per unit to estimate when buying a property.

Buy on Actuals is a mantra of Jake and Gino. This quick video will discuss what a pro-forma is, what it’s used for, and why you should not purchase a property with pro-forma numbers. ONLY use the actual performance of the property.

Unit Mix, what every multifamily investor should look for when purchasing an apartment building. This is an often overlooked rule for beginner investors, and can seriously impede your cash flow and valuation of the property.

Property Class is split up into four designations, and we will discuss the benefits, as well as the disadvantages of owning each type of class. Find out what our preferred class is, and why. If you want to sound like a pro, don’t skip this video.

In the Marketing lesson, find out what is working in today’s market to lease up your vacant apartments. Gone are the days of relying on print media. Learn how to reach a wider audience, and save time and money while leasing up.

Negotiation is a learnable skill in real estate. Most of us don’t realize that we are constantly negotiating for “things” in our life. Let us show you how to become a better negotiator and begin to create win-win scenarios so people will want to sell their deal to you.

Property Inspection, a process whereby you can actually save money by spending it. What does property inspection entail, and how do you pay an inspector? We will show you the importance of this team member and how you can use an inspection report to your benefit.

What is a Repair Allowance, and do investors actually use it successfully? When we first asked for a repair allowance, the broker told us it would never work. We’ve heard that line before, and thankfully we stuck to our guns. You will see how to use one successfully to get cash back at closing to rehab your property.

This 20 question quiz will test your skills on your knowledge of the Rules Of Thumb necessary for investing in Multifamily Real Estate. Take your time, review all of the lessons in sequence and then attempt the ROT quiz.

Good to know

Know what's good

, what to watch for

, and possible dealbreakers

Introduces students to rules of thumb which are necessary to make investing in the multifamily real estate market possible

Explains rules of thumb for cap rates, cash on cash return, debt coverage, property management fees, loan to value, and gross rent multiplier

Helps students understand how to analyze deals and invest better

Examines different property classes, the benefits and disadvantages of each, and which is preferred by Jake and Gino

Teaches students how to evaluate and negotiate deals to begin creating win-win scenarios

Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in Multifamily Real Estate Investing Rules of Thumb with these activities:

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Sharpen your algebra skills to enhance your understanding of the underlying mathematical concepts used in this course.

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Review basic algebraic operations
Practice solving equations
Apply algebra to real-world problems

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Career center

Learners who complete Multifamily Real Estate Investing Rules of Thumb will develop knowledge and skills that may be useful to these careers:

Property Manager

Property managers handle the daily operations of rental properties, which often include multifamily properties. Essential information for property managers is provided in this course, such as management fees, cash flow, and insurance expenses. Understanding each of these items will help property managers make better decisions for the properties they manage.

See salaries and explore the career path for Property Manager

Real Estate Investor

Real estate investors buy, sell, and rent real estate properties, often specializing in multifamily properties. This course may be useful for real estate investors who wish to expand their knowledge of multifamily properties. Specifically useful is the information provided on cap rates, cash on cash return, loan to value, debt coverage ratio, management fees, and insurance expenses.

See salaries and explore the career path for Real Estate Investor

Financial Analyst

Financial Analysts use concepts of return on investment and cash on cash return to make business recommendations. This course can help build a foundation for the analytical approach required of a financial analyst by providing guidelines for understanding cap rates and cash on cash returns. Also, learning about loan to value, debt coverage ratio, and management fees will benefit a financial analyst who may invest in multifamily properties. Understanding how to use the Rule of 72 can be helpful for calculating growth rate and return on investment.

See salaries and explore the career path for Financial Analyst

Real Estate Developer

Real estate developers acquire and develop land for construction projects, including multifamily properties. This course may be useful for real estate developers who wish to build their knowledge of multifamily properties. Information provided on cap rates, cash on cash return, loan to value, debt coverage ratio, and property class can help real estate developers make better decisions about multifamily construction projects.

See salaries and explore the career path for Real Estate Developer

Loan Officer

Loan officers help borrowers secure financing for real estate purchases, including those for multifamily properties. Understanding loan to value, debt coverage ratio, origination points, and mortgage points can help a loan officer determine whether to approve a loan application for a multifamily property.

See salaries and explore the career path for Loan Officer

Property Accountant

Property accountants manage the financial records of real estate properties, including multifamily properties. This course may be useful for property accountants who wish to expand their knowledge of multifamily properties. Information provided on cash flow, capital expenditure, management fees, and insurance expenses can help property accountants better manage the finances of multifamily properties.

See salaries and explore the career path for Property Accountant

Property Inspector

Property inspectors examine buildings to assess their condition, including multifamily properties. This course may be useful for property inspectors who wish to expand their knowledge of multifamily properties. Information provided on property class, property inspection, and repair allowance can help property inspectors better understand the needs of multifamily property owners and tenants.

See salaries and explore the career path for Property Inspector

Landscape Architect

Landscape architects design outdoor spaces, including those around multifamily properties. This course may be useful for landscape architects who wish to expand their knowledge of multifamily properties. Information provided on property class and marketing can help landscape architects better understand the needs of multifamily property owners and tenants.

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Real Estate Lawyer

Real estate lawyers handle legal matters related to real estate, including multifamily properties. This course may be useful for real estate lawyers who wish to expand their knowledge of multifamily properties. Information provided on loan to value, debt coverage ratio, and property class can help real estate lawyers better understand the legal issues related to multifamily properties.

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Appraiser

Appraisers determine the value of real estate properties, including multifamily properties. This course may be useful for appraisers who wish to expand their knowledge of multifamily properties. Information provided on cap rates, gross rent multiplier, and property class can help appraisers better value multifamily properties.

See salaries and explore the career path for Appraiser

Interior designer

Interior designers plan and execute the design of interior spaces, including those in multifamily properties. This course may be useful for interior designers who wish to expand their knowledge of multifamily properties. Information provided on unit mix, property class, and marketing can help interior designers better understand the needs of multifamily property owners and tenants.

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Mortgage Broker

Mortgage brokers help borrowers find the best mortgage loans for their needs, including loans for multifamily properties. This course may be useful for mortgage brokers who wish to expand their knowledge of multifamily properties and better serve their clients. Especially helpful information includes cap rates, cash on cash return, loan to value, debt coverage ratio, and mortgage points.

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Real Estate Agent

Real estate agents help clients buy, sell, and rent properties, often specializing in multifamily properties. This course may be useful for real estate agents who wish to expand their knowledge of multifamily properties. In particular, the information provided on cap rates, cash on cash return, and management fees can help real estate agents provide better advice to their clients.

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Construction Manager

Construction managers oversee the construction of buildings, including multifamily properties. This course may be useful for construction managers who wish to expand their knowledge of multifamily properties. Information provided on cap rates, cash on cash return, loan to value, and property class can help construction managers better understand the financial aspects of multifamily construction projects.

See salaries and explore the career path for Construction Manager

Architect

Architects design buildings, including multifamily properties. This course may be useful for architects who wish to expand their knowledge of multifamily properties. Information provided on unit mix, property class, and marketing can help architects better understand the needs of multifamily property owners and tenants.

See salaries and explore the career path for Architect