Year End Review: Professional Evaluation of Our Six-Unit Property Performance by Michael Scaccia
Our ultimate goal with multi-unit property investment is to achieve financial independence.
To reach this goal, we’ve set some clear criteria for evaluating property performance using three key metrics:
1. Cash flow
2. Appreciation upon stabilization
3. Cash-on-cash return
We’re pretty proud of how one of our properties is performing and we’re gearing up for a potential refinance in the near future.
But hey, it’s not just about giving ourselves a pat on the back. We wanted validation from an expert to assess our performance, in case there are any blind spots we’re not aware of or if we’re unwittingly looking at ourselves through a rose-colored mirror. That’s why we turned to Michael Scaccia, the VP of Mortgage Lending at A&N.
So, why Mike? Well, we haven’t done any business with him, but we’ve crossed paths at some local meetups. Mike knows the real estate industry well. Not only is he a seasoned mortgage professional, but he’s also a real estate investor. This gives him a unique vantage point in assessing our performance.
We handed over our data to Mike and asked him for an evaluation. His feedback was humbling and reassuring. It’s great to know we’re on the right path towards meeting our goals.
For an explanation of some of the terms see the blog on the basic concepts.
Here is Mike’s feedback…
Analyzing the Performance of a 6-Unit Investment Property
As a seasoned mortgage professional and real estate investor, I had the privilege of reviewing the financial performance of a 6-unit property owned and managed by David and Kean of Monte Del Mar. Based on the provided data, this property showcases solid fundamentals and a strategic approach to maximizing returns.
Income and Cash Flow
The property generates a monthly rental income of $8,840, equating to an annualized gross income of $106,080. Factoring in a prudent 3% vacancy rate (-$3,182.40) and additional laundry income of $1,829, the property maintains steady cash flow—a critical indicator of a well-performing asset.
Operating Expenses
With annual expenses such as electricity ($406.36), fuel ($3,173.80), property taxes ($14,551.85), and insurance ($3,224), the total operating costs align well within industry benchmarks. The disciplined management of expenses ensures a lean operation, maximizing profitability for the owners.
Valuation and Return Metrics
The property achieves a Net Operating Income (NOI) of $60,619.08, resulting in a 6% capitalization rate (Cap Rate). This cap rate aligns with market standards for similar properties in the area, suggesting that the property is competitively valued at $1,010,318.
Investment Takeaway
This 6-unit property is a testament to the value of disciplined management and strategic investment. The owners have effectively balanced rental income, ancillary revenue streams, and controlled expenses to achieve solid cash flow and a strong cap rate. For investors considering similar multi-family properties, this case highlights the importance of meticulous financial oversight and a diversified income strategy.
With its current performance metrics, this property not only delivers stable returns but also positions itself for future appreciation—an excellent example of how thoughtful investing can create lasting value in the real estate market.
Introducing Mike…
Hi, I’m Mike. For nearly 9 years, I’ve been dedicated to the mortgage industry, earning all five-star Google reviews along the way. Clients say I feel more like a friend than a salesperson because I truly prioritize their best interests and those of my strategic partners. I’ve originated hundreds of millions in loans, specializing in first-time homebuyers, seasoned investors, and everything in between. On a mission to help more people realize their dream of being a homeowner, and creating real wealth for them in the process!
If you would like to connect with Mike, he can be reached at MikeS@anmtg.com or (708) 822-9809 / (773) 305-7142.
