How to determine ARV on Orlando building

6 Replies

Hi there,

I'm looking at buying a 24 unit apartment building in the Orlando area.  The building cost $699k and needs around $200k in repairs.  The building has 15 efficiency units, 3 1BR units, and 6 2BR units.

What process should I use to determine the ARV of the building? Any thoughts would be greatly appreciated!

Thanks!
Robert.

Hi Christopher,

Thank you for that. I did the math assuming a 6.45% Cap Rate for Orlando, along with $115,544 NOI but I don't believe this building could ever be worth $1.8M. Is my math incorrect?

Thanks!
Robert.  

@Robert Lindsley

So you are saying that you are NETTING (or planning on netting) $9628.67 on this property per month? ($115,544/12 months)

Originally posted by @Robert Lindsley :

Hi Christopher,

Thank you for that. I did the math assuming a 6.45% Cap Rate for Orlando, along with $115,544 NOI but I don't believe this building could ever be worth $1.8M. Is my math incorrect?

Thanks!
Robert.  

Your math is correct. I imply from your assumptions that the units are currently way under-market (for my own back of the napkin math's sake, if you bought the property at the same 6.45 cap, then the NOI is currently ~$58k). So if you bring them up to market, then you'd clearly be adding a lot of value when you sold to another investor after stabilization.

Robert,

I looked at the property for another investor, and I think their proposed rents are inflated, as well as the resale number, but none the less, I think money can be made after spending at least $200+

Hi Kim,

This is why I love BiggerPockets!  Thanks for your thoughts on this.  Yes, I am adjusting the rents to what I see as more reasonable and will re-evaluate the repair costs.  I'm looking at the building tomorrow and would love to hear your thoughts via PM.

Thanks!
Robert.

Originally posted by @Kim Meredith Hampton :

Robert,

I looked at the property for another investor, and I think their proposed rents are inflated, as well as the resale number, but none the less, I think money can be made after spending at least $200+

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