Multi family :calculating purchase cost

[Raj Parwani]

so lets say the NOI is 100K . if you want to know what price to offer , would you use 6% cap rate or 9-10% cap rate. With 6% cap rate you would offer 100K/6% = $1.67M. but with cap rate at 10% : 100K/10% = $1M. How do you know which cap rate to apply? what is the normal cap rate used in 5 plex? Do we use NOI in the 4 plex to calculate value ?

Thanks 

raj 

[Brian Garrett]

Cap rate is determined by the market and asset class not the property itself.

You need to see what the going cap rate is for the area and type of property.

For the 4plex you would use comps to determine value just like a single family.