Multi-Family Property Calculator

Multi-family property calculator measures cap rate for apartment buildings (2+ units). 2M 10-unit building at 1,500/unit average rent, 5% vacancy, 45% opex = 180k gross potential rent, 171k effective gross, 94k NOI, 4.7% cap rate. Multi-family typically 4-7% cap rate (better than single-family) due to economies of scale.

Example: 2M apartment building, 10 units, 1,500 average monthly rent. Gross potential rent = 180,000. 5% vacancy = 171,000 effective gross. 45% opex = 77k. NOI = 94,050. Cap rate = 4.70%. Solid for stabilised property in growth market. Price per unit = 200,000 - useful comparison metric across deals.

Multi-family advantages: (1) Diversification (10 tenants vs 1, single vacancy = 10% revenue loss vs 100%). (2) Economies of scale (one roof, one boiler, shared marketing). (3) Easier financing (commercial mortgage rates competitive). (4) Forced appreciation (improve operations, increase NOI, value rises proportionally). (5) Tax efficiency (cost segregation, depreciation). Disadvantages: management complexity, higher upfront capital needed (500k+ for small building).

Quick example

With property price of 2,000,000 and total units of 10 (plus average rent per unit of 1,500 and vacancy of 5%), the result is 4.70%. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.

Which inputs matter most

You enter Property Price, Total Units, Average Rent Per Unit (monthly), Vacancy %, and Operating Expense Ratio %. Not every input has equal weight. Adjusting one input at a time toward extreme values shows which ones move the result most.

What's happening under the hood

Gross potential rent × (1-vacancy) × (1-opex%) = NOI. Cap rate = NOI / price. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.

Where this fits in planning

This is a "what-if" tool, not a forecast. Use it to test ideas before committing: what happens if the rate is 2% lower than hoped, what happens if you add five more years. The value is in the scenarios you run, not the single answer you get from the defaults.

What this doesn't capture

Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. The number represents one scenario rather than a forecast.