$215K gap between asking price and what the numbers support — 6-unit Multifamily

Multi-Family and Apartment Investing
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$215K gap between asking price and what the numbers support — 6-unit Multifamily

Chidiebere Stanley Ogah
Kansas City, MO · Member since 2026 · 19 posts · 1 vote

Ran an independent underwriting pass on a 6-unit multifamily listing in Parsons Ave, Columbus, OH — thought I'd share since the reconciliation issue is a good example of why I don't take listing NOI at face value.

Listed at $1.2M. Income minus expenses actually didn't equal the seller's stated NOI — a $4,845 gap with no explanation given. Two different listing platforms also showed two different asking prices for the same property.

Using the seller's own stated NOI and standard financing assumptions (70% LTV, 1.25x DSCR), the price that actually supports normal financing terms comes out to roughly $985K — about $215K below asking.

This is the kind of check I run before recommending an investor move on a deal. DM to share the full write-up if anyone wants to see the format.

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  • Greg ScottPro Member
    Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
    1mo

    The NOI gap is a big issue and probably makes the deal go tilt, although sometimes unsophisticated owners don't know how to maximize value.

    I've not actually seen anyone start with financing assumptions to derive a price. Basing price on financing assumptions means the price fluctuates based on interest rate and your LTV assumption. It is more common to either determine the Cap Rate based on the actual NOI and asking price or use the prevailing Cap Rate and actual NOI to determine a "market price". Once you have a "market price" then you may adjust to get to your "offer price" based on expected cashflow, equity multiples, and available financing.

    What was the Cap Rate based on asking price and NOI?

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    • Chidiebere Stanley Ogah
      OP
      Kansas City, MO · Member since 2026 · 19 posts · 1 vote
      1mo

      Appreciate the correction. Cap rate on asking price using stated NOI comes to 5.95% ($71,429 / $1.2M).

      You're right that I skipped a step. I backed into a DSCR supported price without first establishing a market cap rate from actual comps, which means that $984K figure is really a financing-constraint check and not a market valuation. I treated "financeable" and "fairly priced" as the same question which aren't. Correct sequence is as you said. Market cap rate from comps → NOI/cap rate for market price → adjust for financing and equity multiple to reach an offer price. Comps are the piece I'm missing on this one. That's the real next step before drawing any price conclusion. Appreciate you catching it.

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  • Denise SuppleeBusiness Member
    Realtor · Willow Grove, PA · Member since 2017 · 1k+ posts · 653 votes
    1mo

    Nice catch on that NOI gap, that's exactly the kind of thing I'd flag as a Realtor before an investor went under contract. Where I'd add to what Greg said, when I'm pulling comps for a multifamily like this I lean on actual closed sales and rent rolls from similar unit counts and vintage in that submarket, since a 1920s building on Parsons Ave prices very differently than something built in the 90s. That market cap rate is really your anchor, everything else, financing terms included, should adjust around it.

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    • Chidiebere Stanley Ogah
      OP
      Kansas City, MO · Member since 2026 · 19 posts · 1 vote
      1mo

      The NOI gap could be that they didn't list the exact operating expenses. Rent rolls of the property wasn't provided. Appreciate your method. I didn't check the comps data and that's something I missed just as Greg said.

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