Criteria for investing in Mulftifamily Residential vs. Commercial

1 Reply

I think I know the difference in analyzing multifamily deals residential (2-4 units) vs 5+ units (apartment buildings), but I want to make sure. Small multifamily residential you analyze based on comps, squarefootage, features, and condition whereas apartment buildings you analyze based on income and cashflow that the property generates. Is this correct? If not, or if my assessment is a bit off, could somebody please correct me?

@Ben Feder

Yes, commercial multifamily's value is based off the current NOI (debt service not included). Currently with the market where it is, many investors are (over) paying for properties in the hopes of making their money by doing some work and increasing the rents (value-add). This is a viable model until there is a pull back.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here