Multi family valuations vs Residential
I’m seeing some residential portfolios (4-plex and maybe an occasional 5-unit MF in there) listed for sale in my area.
I've been focused on MF value properties and understand how NOI impacts the valuation.
Let’s say these residential portfolios (mostly a fourplex portfolio) have a cap rate of 10% across 7 properties (28 units). The “valuations” on each property per Zillow might have them at a total of $1.5M. Meanwhile, MF cap rates might push this to $1.9M.
Which method would be justifiable and I’m assuming any financing would be based off of residential lending, with each individual property being appraised (the $1.5M).
If this is the case, I can’t raise rents and drive a higher valuation like I can in MF, right?
Thank you!