Before you invest in any apartment building—whether it’s a 6-unit rehab or a 40-unit stabilized deal—you need a fast, effective way to analyze it. This guide gives you a simple, repeatable framework that seasoned investors use to spot winning deals and avoid money pits.
1. The 5-Minute Deal Snapshot
- Purchase Price: What’s the ask? Is it in line with market comps?
- Gross Income: Total rent roll + other income (laundry, parking, etc.)
- Operating Expenses: Use 35–50% of gross income as a rough estimate
- Net Operating Income (NOI) = Income – Expenses
- Cap Rate = NOI ÷ Purchase Price
2. Core Deal Metrics to Know
- Cash-on-Cash Return = Annual cash flow ÷ Total cash invested
- Debt Service Coverage Ratio (DSCR) = NOI ÷ Annual loan payments
- Price Per Door: Total price ÷ number of units
- Expense Ratio: Expenses ÷ Gross income
- Rent Growth Potential: Compare in-place rents to market comps
3. Quick Deal Filters
- Cap Rate > local market average = potential upside
- DSCR ≥ 1.25 is generally financeable
- Cash-on-Cash ≥ 8% = solid performance in most markets
- Look for rent upside, low expenses, and stable tenant base
4. Pro Tips
- Always request T12 (trailing 12-month financials) and rent roll
- Verify utility responsibility (tenant vs owner-paid)
- Compare crime stats, schools, and walkability
- Visit the property at different times of day
Need help evaluating a specific deal or building your investment strategy?
👉 Reach out to us — we’re here to guide you every step of the way.