Need help with property value

[Jeremy Hartwig]

I'm looking to purchase an 8 unit property.  The owner is asking 600k but I'm not sure his valuation is accurate. The property consists of two 3 unit and one 2 unit buildings.  All units are 2 bed 1 bath, single story with off street parking.  He is currently getting $550/month for each unit.  I believe that when determining value in commercial real estate part is based on current rent.  If I'm wrong I'm sure someone will correct me.  If someone can explain or point me in a direction that could help with that that would be great!

[Alfath Ahmed]

Quote from @Jeremy Hartwig:

I'm looking to purchase an 8 unit property.  The owner is asking 600k but I'm not sure his valuation is accurate. The property consists of two 3 unit and one 2 unit buildings.  All units are 2 bed 1 bath, single story with off street parking.  He is currently getting $550/month for each unit.  I believe that when determining value in commercial real estate part is based on current rent.  If I'm wrong I'm sure someone will correct me.  If someone can explain or point me in a direction that could help with that that would be great!

 It really depends on the location of the property. Most dayton sellers are starting to think that dayton is columbus when it is not. I would do a cap rate evaluation and try to achieve close to a 8-cap after all expenses. 

Look at the per sqft cost. Run comps on duplex, 3-unit, 4-units, etc. This will give you a really good understanding of what you are paying.

Lastly, look at the capEx on the property. What needs to be taken care of immediately vs later.