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Multi-Family and Apartment Investing

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Andrew Alvarez
  • Investor
  • Bernalillo, NM
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How much should I pay for this 8plex?

Andrew Alvarez
  • Investor
  • Bernalillo, NM
Posted Jun 1 2022, 11:02

Generally speaking, an 8-plex with an annual gross income of $91,200 would be worth how much to purchase? Cash purchase.

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Patrick Drury
  • Real Estate Agent
  • Columbus, OH & Cleveland OH
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Patrick Drury
  • Real Estate Agent
  • Columbus, OH & Cleveland OH
Replied Jun 1 2022, 11:18

@Andrew Alvarez  
That's a loaded question. It depends on location, condition, and what you are measuring. If you are basing your investment on certain cash on cash return, then use that to decide paired with comps and condition. There isn't a sheet to plug in those numbers and get a value for them. You need to evaluate all three of those items. Small multi-family relies heavily on sold comps. That's how they appraise typically, so that's pretty important. Also, the condition is important as well because maybe there are comps to support the value of this 8-unit, but they are all fully renovated and yours is not. Lastly, I think the location is important. That should be a no-brainer I don't think I need to explain that one.  

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J Zev J.
  • CPA
  • Colorado Springs, CO
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J Zev J.
  • CPA
  • Colorado Springs, CO
Replied Jun 1 2022, 13:43

@Andrew Alvarez - You might want to reach out to a local commercial agent who can help you with the cap rate you should use for valuation purposes. You'll also need the net operating income (not gross income) so you can calculate the value. Then you'll divide the net operating income by the cap rate to get a value. 

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