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Multifamily Real Estate Investing Rules of Thumb

Learn to become more confident in analyzing opportunities and making offers that land you highly profitable real deals.
4.6 (21 ratings)
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268 students enrolled
Last updated 11/2015
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  • 1.5 hours on-demand video
  • 24 Supplemental Resources
  • Full lifetime access
  • Access on mobile and TV
  • Certificate of Completion
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What Will I Learn?
Analyze deals and investing opportunities with more confidence and accuracy.
Understand Cap Rates and how to use them in their investment strategy.
Have much greater confidence in doing due diligence for an investment.
Have an accurate investment goal through cash on cash returns.
Understand property management costs and savings.
View Curriculum
  • Included with this course is the Rule Of Thumb ebook. We highly recommend that students download this book, print it out and follow the course alongside the Rules Of Thumb ebook.

This course lays out our guidelines and parameters for a great deal. Multifamily Real Estate Investing Strategist and Consultant, Gino Barbaro will help you get a strong understanding of cap rates and cash on cash returns, vital for beginning investors to learn about in order to correctly analyze a deal.

What formulas should you use? In this course, you will be able to analyze a deal faster and with higher accuracy using our Rules of Thumb.

What are some of our rules?
  • Cap Rates: What is a cap rate, and how will you best use them in your investment strategy?
  • Cash on Cash Return: We will detail the return we strive for with our investments and help you define yours? (hint: 10%)
  • Debt Coverage Ratio: What ratio will your bank look for when deciding whether to provide your business with financing?
  • Management Fees: What are the going rates to manage your properties?
Once you learn the basic rules of thumb, you will become more confident in analyzing deals, going through the due diligence phase, and putting in offers that will land you deals. You will also learn how to manage your property more effectively.
Who is the target audience?
  • This course is ideal for beginner and seasoned real estate investors looking to get a strong understanding of Multifamily Real Estate Investing.
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Curriculum For This Course
Expand All 25 Lectures Collapse All 25 Lectures 01:41:15
Rules of Thumb For Multifamily Real Estate Investing
25 Lectures 01:27:15

This book lays out our guidelines and parameters for a good deal. Here we discuss cap rates and cash on cash returns that we strive for. It is vital for beginning investors to learn how to correctly analyze a deal.

What formulas should I use? You will be able to analyze a deal quicker and more accurately using our Rules of Thumb. What are some of our rules?

○ Cap Rates: What is a cap rate, and how do investors use them?
○ Cash on Cash Return: What is our return that we strive for? (hint: 10%)
○ Debt Coverage Ratio: What ratio does a bank look for when deciding whether to provide financing?
○ Management Fees: What are the going rates to manage a property

Once you learn the basic rules of thumb, you will become more confident in analyzing deals, going through the due diligence phase, and putting in offers that will land you deals. You will also learn how to manage your property more effectively.

Preview 14 pages

Introduction to Rules of Thumb For Multifamily Investing.

Loan to Value, the amount banks are willing to lend as a percentage of the total loan. As you will see, loan to value will differ on the type of deal you have and the amount of experience you bring to the table.
Loan to Value, learn what banks are willing to lend you.

Often misunderstood, cap rates are a widely used calculation in multifamily investing that measures the rate of return on your investment. Understanding how to properly use cap rates is vital to investing.

Cap Rates and how to measure the rate of return on your investments.

One of the most popular calculations in among multifamily investors to calculate their rate of return is Cash on Cash. In this lesson, Gino is going to teach you exactly how to us this calculation and why it's so important.

Cash on Cash, calculating your rate of return.

This is a very important metric that banks use to decide whether to finance your deal. Find out what the banks are looking for and see what Jake and Gino strive for. This formula will show you if your property is generating enough income to pay the mortgage and the bills.

Debt Service Coverage Ratio (DSCR) and how to best qualify for loan approval.

Do you know how much your expenses should be as a percent of your gross income? In this lesson, Gino is going to map the path for you to making certain you know the percentage of the gross income of your investments.
Percentage of Expense to Gross Income and knowing your numbers.

Capital Expenditure is one of those rules that many investors are confused by and tend to neglect. Let us show you how to calculate cap ex and give you examples why you need to set up a capital expenditure account. Don’t make the same mistake that Jake and I made, almost sidetracking our investing careers.

Capital Expenditures, how not to be caught with your pants down

Mortgage Points are often confused with origination points. So, what is a loan point and should you consider points when financing a property? We will discuss origination points and show you how to lower the origination fee on a loan.

Mortgage Points, the difference between discount and origination.

As far and Jake and Gino are concerned, knowing your management fees are among the most important elements of running a successful multifamily business. Knowing what management companies charge, and knowing if you should hire a management company or self-manage. We let you decide.

Management Fees, hiring companies and self managing.

Cash Flow is the REASON why anyone should be investing in real estate. We view capital appreciation as icing on the cake. Would you buy a business that is losing money? Neither would I, and you shouldn’t purchase a property that has negative cash flow.
Cash Flow, The reason why you should be investing in real estate.

GRM, also known as Gross Rent Multiplier is a quick calculation to estimate a property’s value. Although it is not a very accurate calculation, it shows us if the property is vastly under or over priced and leads us to analyze the property more in depth.

How to use the Gross Rent Multiplier(GRM) when investing in real estate property

A landlord hates to experience Vacancy Loss, but it is a value play to investors. We describe the benefits as well as the detriment of experiencing vacancy loss and the acceptable amount a landlord should tolerate.

Calculate your Vacancy Loss and learn your Acceptable Vacancy Rate

Due Diligence, two of the most important words to every investor, can be a confusing process to any novice investor. Seasoned investors often overlook small details, so we assembled a checklist to follow when performing due diligence prior to closing on a deal.
Due Diligence, the two most important words in investing, here's your checklist.

Jake and I often use the Rule of 72 to calculate how long it will take us to double our money with a certain investment. Conversely, we also use the formula to show us the rate of return we have to achieve if we want to double our money within a certain time period.
Rule of 72, estimate how long it will take to double your investment and ROR.

How to Hold your real estate is a critical Rule of Thumb, and investors vary widely on the type of entity they use. Some investors find it wise to hold real estate in their personal names, and we will show you the benefits of creating an LLC to protect yourself.

How to Hold, employing different entities for real estate and top preferences.

Insurance Expenses can vary widely from market to market. We will discuss the type of insurance every property owner should purchase, as well as the cost per unit to estimate when buying a property.
Insurance Expense, finding the right coverage for your investments.

Buy on Actuals is a mantra of Jake and Gino. This quick video will discuss what a pro-forma is, what it’s used for, and why you should not purchase a property with pro-forma numbers. ONLY use the actual performance of the property.

Buy on Actuals, properly using your pro-forma to buy at the "right" price.

Unit Mix, what every multifamily investor should look for when purchasing an apartment building. This is an often overlooked rule for beginner investors, and can seriously impede your cash flow and valuation of the property.
Understanding Unit Mix in an apartment complex.

Property Class is split up into four designations, and we will discuss the benefits, as well as the disadvantages of owning each type of class. Find out what our preferred class is, and why. If you want to sound like a pro, don’t skip this video.
Property Class, learning the pros and cons of each four.

In the Marketing lesson, find out what is working in today’s market to lease up your vacant apartments. Gone are the days of relying on print media. Learn how to reach a wider audience, and save time and money while leasing up.
Marketing, fill your vacancies, reach a larger audience and save a lot of dough.

Negotiation is a learnable skill in real estate. Most of us don’t realize that we are constantly negotiating for “things” in our life. Let us show you how to become a better negotiator and begin to create win-win scenarios so people will want to sell their deal to you.
Preview 10:52

Property Inspection, a process whereby you can actually save money by spending it. What does property inspection entail, and how do you pay an inspector? We will show you the importance of this team member and how you can use an inspection report to your benefit.
Property Inspection, protecting yourself and hiring the right inspectors.

What is a Repair Allowance, and do investors actually use it successfully? When we first asked for a repair allowance, the broker told us it would never work. We’ve heard that line before, and thankfully we stuck to our guns. You will see how to use one successfully to get cash back at closing to rehab your property.
Repair Allowance, getting cash back at closing to use on deferred maintenance.

This 20 question quiz will test your skills on your knowledge of the Rules Of Thumb necessary for investing in Multifamily Real Estate. Take your time, review all of the lessons in sequence and then attempt the ROT quiz.

Multifamily Rules Of Thumb Quiz
20 questions
About the Instructor
4.4 Average rating
88 Reviews
596 Students
4 Courses
Multifamily Real Estate Investing

What started out as a conversation between friends has exploded into a thriving real estate investment and consulting business that continues to grow in size and profitability. Jake Stenziano and Gino Barbaro are now considered two of the most sought after experts in real estate investment and have achieved, in just a few years, the sort of financial freedom they always wanted but weren’t sure was possible. And while a certain amount of timing, coincidence, and luck brought them together, through their courses they will be your partner, bringing that same luck, and years of experience, right to you every step of the way.

Financial freedom isn’t just a dream, it’s something everyone can find for themselves. While you’ll be responsible for finding the properties, within these lessons you’ll discover not only tips and best practices for uncovering that first opportunity, but a framework that will allow you to grow your portfolio from a single property to multiple revenue generating investments.

"I'm not going to kid you, it takes work. But having the right partnerships and people with the experience to guide you through those challenges you will face ... that's what gets the results you never dreamed possible. You can do it - and we'll be here for you every step of the way" - Gino

Gino Barbaro graduated from Fairfield University in 1992 with a degree in finance, and subsequently struggled to locate a job in the terrible economy. He was fortunate to locate employment with AIG, though it was only through a bit of lucky networking that he was able to do so. He worked in the reinsurance accounting department, and quickly realized that watching paint dry was more pleasurable than working in insurance. Gino’s father owned a restaurant where Gino had worked since he was eight years old and he returned there, rather than languish in a cubicle.

Gino still runs the restaurant to this day, but he realized years ago that, while running the restaurant was a great job, it would not allow him to accumulate wealth. That dream of financial freedom was ever present, but it seemed like it would always be just out of reach.

In addition to the restaurant, Gino’s parents had also owned a number of investment properties, something which intrigued him. Following their example, he purchased his first multi-family property in 2002. The property consisted of a three-family home with a detached garage and office. The home was next to the restaurant and he could use one of the garages to store supplies and merchandise for the restaurant. The problem was, he wasn’t quite sure what to do next. He began studying, learning more about the real estate industry and waiting for the right opportunity to come around.

Jake Stenziano was working in sales for a top three pharmaceutical and vaccine manufacturer. The job paid well enough, and helped he and his wife get by, but as with most jobs in that field it would never be enough for them to truly be comfortable. In trying to get ahead and make those dreams of financial freedom slightly more attainable, Jake pushed for a transfer from Westchester, New York to Tennessee, where the cost of living was lower.

At the same time, he knew that his career was far from secure no matter where he went. The pharmaceutical company he was working for had six layoffs in eight years, resulting in thousands of lost jobs. Feeling like it was only a matter of time before his number was called, Jake began thinking about how he might secure a future for himself where he wasn’t at the mercy of a corporate axe.

The one solution that stuck out to him came from one of his clients, a doctor he met with frequently through work. The doctor told Jake that the secret to attaining wealth had nothing to do with finding a great job or getting lucky. The secret was in real estate. It was an attractive idea, but Jake knew nothing about the market. He began doing some research, and resolved to see if he could find property in Tennessee to begin his investment portfolio.

What he found was that, much as the cost of living was lower there, so too was the cost of investing in properties. What’s more, he identified a potentially lucrative market that seemed virtually unnoticed by the investors in the area: multifamily properties. Jake realized that these were self-sustaining, in that they could literally pay for themselves, and that there would always be a need for these apartment and condo complexes. It seemed too good to be true. He was moving someplace where he could live more comfortably and, potentially, start experimenting in real estate. Still, he wasn’t totally comfortable with the idea of risking so much, and he too found himself debating what to do next.

Jake happened to frequent Gino’s restaurant, as he was friends with Gino’s brother Marco. On one of his last trips in before moving, he found himself at a table talking to Marco about his plans. It turned out that Marco had begun investing in real estate with Gino.

Yeah, you should talk to my brother about that,” Marco said. “He knows all about it.

Marco wasn’t kidding. Gino had come a long way from a guy who didn’t know what to do with his first multifamily property. When Gino and Jake sat down, they instantly found that they had the same goals. What’s more, Jake had the perfect opportunity for them in multifamily real estate, and Gino knew the ins and outs of the business already. With Jake on location in Tennessee and Gino ready to share everything he knew about investing in real estate, they founded their partnership right there and never looked back.

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