E132 What Smart Investors Should Look for in Multifamily Deals?

Become an REI Hot Seat Insider: ⁠https://submit.jotform.com/info_Admin_info831/rei-hotseat-insider-sign-up-formIn episode E132 of the REI Hot Seat, Andrew Hines is joined by David Hulshof and Jacob Campanaro for an in-depth analysis of a 17-unit apartment building in Goderich, Ontario. The trio dives deep into the numbers, evaluating the building's current and projected performance using a CMHC-insured loan model. They discuss total return vs. cash-on-cash return, highlighting that smart investors must account for both operational costs and long-term capital expenditures (capex), such as roofs, boilers, and windows, even when they don’t immediately impact rent.The property is a purpose-built structure with a steel roof and most utilities passed through to tenants. The team estimates a 5.5% cash-on-cash return with $32,000 annual net income on a $585,000 investment at a $3 million purchase price. Jacob also highlights the rare value of handicap-accessible units, which can command higher rents, and they touch on the potential of small-town Ontario markets like Goderich and Kincardine, which have strong rent demand, higher-than-expected incomes, and lifestyle appeal. The episode wraps with advice on analyzing deals quickly using gross rents, cap rates, and value-add projections, showcasing the Goderich property as a solid hybrid between turnkey and value-add investment, with potential for long-term appreciation and stable cash flow.Don't forget to join the Insiders list for access to off-market deals and other unique opportunities.Andrew's linktree : https://linktr.ee/theandrewhinesREI Hot Seat Instagram: https://www.instagram.com/reihotseat/Jacob Campagnaro Instagram: https://www.instagram.com/jacob_campagnaro/David Hulshof Instagram: https://www.instagram.com/davehulshof.realestate/E132 What Smart Investors Should Look for in Multifamily Deals?00:50 – Overview of 17-Unit Goderich Deal03:58 – Seller’s Price & Renovation Status05:07 – Accessible Units and Rental Premiums07:31 – Small-Town Rent Potential & Demographics09:45 – Parking, Storage & Revenue Opportunities11:37 – Realistic Property Management Costs14:59 – Operating Expense (OPEX) Benchmarks19:09 – Deal Breakdown & Financing with CMHC21:37 – Understanding Capital Expenditures (CapEx)24:59 – Adjusting Cap Rate for Renovations29:03 – Stabilized Value vs. Purchase Price31:30 – Hybrid Deal Strategy SummaryDisclaimer: This episode, as with every episode of this show, should NOT be considered as advice. Investment advice is NEVER given on this show. Always consult a competent investment advisor before making an investment decision.---Andrew Hines is a seasoned real estate investor, business-builder, educator, and podcast host, well-recognized for his extensive experience in the field. Andrew graduated with an HBA from the Richard Ivey School of Business in 2008 and spent three years teaching introductory business at Western University as a Lecturer. He has been investing in real estate since 2011 and completing value-add projects since 2015, primarily in the luxury student rental space. Andrew started a project management company for building out new-construction townhomes in 2016 and has since built over 50 residential units throughout Southwestern Ontario. Andrew is an advocate for treating real estate investing like a business and uses his experience in his educational endeavors, coaching numerous investors on strategies to achieve financial independence and scale their portfolios effectively.His podcast, "The Andrew Hines Real Estate Investing Podcast," serves as a platform for sharing insights, strategies, and success stories, connecting a community of like-minded individuals passionate about real estate investing. With a background that blends practical investing experience and investor-focused work, Andrew has become a pivotal figure in the Canadian real estate investing community.