Valuing portfolio of 4-plexs as commercial

[Brandon Metzler]

I’ve been evaluating smaller multifamily properties for a few months and plan to start making some offers in the next couple of months. I’ve been looking at residential multis and commercial multis. When valuing a portfolio of quads, would one value based on the cap rate of the portfolio (even though they’re technically residential properties)?

[David Monroe]

@Brandon Metzler If they would be included in one transaction, Yes! You can get a blanket loan for all the 4 units if they are separate owners.

Even if they're purchased in separate transactions with multiple owners, you still should underwrite the whole portfolio as one for future projections, depending on your exit strategy.

How you present the proforma and executive summary to the lender will depend on how you purchase the assets.