Multi-family home purchase

6 Replies

Good morning everyone!!

I am in the market for a multifamily home, looking to stay on the property.  I have found a property in mableton ga, but there's no comps available.  Any tips and tricks on ways to ensure that it's a good buy When there's not anything to compare it to?

@Bryan Sinegal When you say multifamily, how many units are you talking about?  Under 4 units is valued differently than 5+ units

Just 2 units on this one.  And thanks for your response, look forward to your thoughts! 

Use expected income to evaluate a property, which is common practice. comps make less sense for multifamily than single family.

1, calculate the net operating income

2, find the cap rate (this can be subjective though, especially for residential properties)

3, expected property value = noi / cap rate

There are a few spreadsheets on this website that will help you well. Put your numbers in it and see what the results are. It will be super helpful if you get used to analyzing this way.

@Bryan Sinegal

 - an appraiser will make value adjustments based on comps.  So if your lot sq footage is bigger or smaller than nearby comps they will assign a value to the land and add or subtract to the value.  Same goes for anything else that makes it different.  

What does your agent say?

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