Valuing a Portfolio of apartments and duplexes

5 Replies

Someone is selling off their portfolio in a small town near me. For 1.9 million they are listing about 32 doors. There is a seven Plex, a five Plex, and the rest are mostly Duplex is with some two bed one bath single families. He has 28 of the 32 Doors occupied and a potential gross rent roll just over 20,000. it's an area that we want to invest in end of properties all looks well Kevin but I'm having a hard time coming up with a valuation on them. I have reached out to see if I can find the information I need to back into the NOI. The average door price is 65,000 those some of them are 600 square-foot one bed one bath apartments and some are duplex is probably worth over 150k. (We're in the Midwest).

I’m not really sure where to go from here. I have credit lines of about $100,000 and currently own one in process flip, three single families, and one for plex. I think the best way that I could make this possible would be to try and get a couple hundred thousand dollars of the seller financing, $100,000 from my own line of credit, and maybe try and raise a couple hundred from outside investors.

When negotiating some thing like this do I just look at the whole portfolio? Figure out the actual NOI and apply a caprate to it? I'm also open to looking at just the apartment complexes or just a couple duplexes at a time. I'm just not sure where to go from here. I guess the obvious answer is we could structure anything we wanted, but this is definitely a level up for me.

I’d love to hear any thoughts or consideration. I know a lot of this is vague but I’m looking for more details. Thanks!

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It sounds like you're trying to raise the capital for your down payment then finance the rest given the numbers you shared. If that's correct, I'd start by finding a portfolio lender - probably a local bank. They'll be very familiar with the buildings, neighborhoods and will be able to tell you what they would and would not be willing to fund. They want a deal that works for them if your loan fails so they have to be comfortable with the market value of the properties, which is why they're able to do a rough assessment when considering what to bring into their portfolio.

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