Multifamily is a term used to describe residential properties that have more than one living unit, such as apartments, condominiums, townhouses, and other types of housing.

Here are some common key terminologies used in multifamily:

1. Occupancy Rate: The occupancy rate is the percentage of occupied units in a multifamily property. It is calculated by dividing the total number of occupied units by the total number of units in the property.
2. Cap Rate: A cap rate, or capitalization rate, is a ratio used to evaluate the financial performance of a real estate investment. It is calculated by dividing the net operating income (NOI) of a property by the current market value or purchase price of the property. The cap rate is used to determine the potential return on investment for a real estate property, and can also be used to compare the relative value of different properties. A higher cap rate indicates a higher potential return on investment.
3. Gross Rent Multiplier (GRM): The gross rent multiplier is another metric used to evaluate the profitability of an investment property. It is calculated by dividing the market value of the property by its gross annual rental income.
4. Net Operating Income (NOI): The net operating income is the income generated by a multifamily property after deducting all operating expenses, such as property taxes, insurance, maintenance costs, and management fees.
5. Cash-on-Cash Return (CoC): The cash-on-cash return is a measure of the cash income earned on an investment relative to the amount of cash invested. It is calculated by dividing the annual cash flow by the total cash investment.
6. Average Daily Rate (ADR): The average daily rate is the average price per night that tenants pay to rent a unit in a multifamily property. It is calculated by dividing the total rental income by the number of occupied units and the number of days in the period.
7. Rent Roll: A rent roll is a document that lists all the units in a multifamily property, along with the rent amount, lease terms, and tenant information. It is used to track rental income and occupancy rates.
8. Tenant Turnover: Tenant turnover refers to the rate at which tenants move in and out of a multifamily property. It can impact the property's occupancy rate and overall profitability.
9. Market Rent: Market rent is the rent that a property can command in the current rental market, based on factors such as location, amenities, and competition.
10. Concessions: Concessions refer to incentives offered by landlords to tenants, such as free rent, waived application fees, or reduced security deposits, to encourage them to sign a lease or renew their lease.

Once the key terminology is understood, it is time to understand if the property is a great investment! Analyzing the deal takes skill and repetition however, there are terms you will be able to identify your rule of thumb metrics for such as ROI, IRR, and Equity Multiple critera that you as an investor will be able to quickly analyze deals that come across your desk,

What is a good ROI on multi-family?

A good return on investment (ROI) for a multi-family property can vary depending on a number of factors, including location, property condition, and the current market conditions. Generally, an ROI of 6-12% is considered to be a good return for a multi-family property. However, it is important to conduct thorough research and analysis before making any investment decisions.

There will also be the market terminology to look for when vetting multifamily investments!

Market Terminology

• Economic growth: Invest in markets that are experiencing economic growth, as this can lead to increased demand for goods and services, and in turn, higher profits for companies.
• Low unemployment: Low unemployment can indicate a strong economy and is typically associated with increased consumer spending, which can benefit companies and lead to higher profits.
• Interest rates: Low interest rates can make it cheaper for companies to borrow money, which can lead to increased investment and growth.
• Political stability: Invest in markets that are politically stable, as this can provide a more predictable business environment.
• Valuation: Look for markets where prices are undervalued, as this can provide a good opportunity to buy low and sell high.
• Diversification: Diversify your portfolio across different sectors and markets, to spread the risk and increase chances of a return.

It's important to note that past performance is not a guarantee of future results and it is important to perform due dilligence on the operator, the market and the deal!