How do you underwrite an apartment complex with a negative NOI?
Need some help from the community. I'm meeting with a broker to walk an off-market apartment complex here in Cincinnati. The property is in a downward spiral, so I think this could be a fantastic deal with great value add/upside potential.
The problem: I just got financials today, and P&L from 2015 and YTD 2016 shows a negative NOI. Since rule #1 of multifamily investing is to buy on actuals, and NOI/CAP = value, how should I go about calculating the value of this property? The asking price is significantly overpriced (priced off stabilized/proforma numbers), so I want to be able to rationally/credibly defend my valuation and potential offer price. Any advice is greatly appreciated...thanks!