Buying a 5 unit - How to determine rehab value?

[Shawn Alexander]

Looking to purchase a 5 unit complex, 4 unit is 2 bed 1 bath 1 unit is 1 bed 1 bath. How do you determine what the rehab value would be if you have no local comps, any help would be awesome!

[Justin R.]

There are really 3 ways to value a property.

1. Sales comparables (most common used for 1-4 units)

2. Income approach (Cap rate based upon NOI) This is the standard for 5+ units

3. Cost/Build approach (less common, used for some appraisals and insurance)

If you go the income approach and based it upon the ARV, make sure you use your new rental numbers, rehab costs, and holding costs. Best of luck!@