Estimating the ARV of a small multifamily

5 Replies

Hi everyone,

I'm looking into house hacking my first small, multifamily property (hopefully a quadruplex), and I'm having trouble determining market value for these properties. I know the market value of a single family home is typically dictated by comps, and I have a sense that the value of larger multifamilies is dictated by ROI, but small multifamilies seem like they live somewhere in between. I'm hoping someone out there can offer advice on estimating the values of these homes. Thanks for your help,

Thanks, Will. The quadruplex I'm looking at is in a town that doesn't have any other quadruplexes for sale, or any recently-sold quadruplexes. Would you just compare price per square foot with SFHs in the area? Or is there some other metric that's more reliable? Thanks again for your help.

Juan, my real estate agent advised me compare the price per square foot of my quadruplex with the price per square foot of other small, multifamily homes in the area. There weren't other quadruplexes that could serve as a reference point, but we were able to use other duplexes and triplexes as a point of comparison. I'm under contract now, and am about to have the place appraised, so I'll find out soon whether this was the right idea. Best of luck to you!

I ran into this issue on a triplex I'm currently trying to buy. The seller wants $230/sf.

A triplex near by recently sold for $210/sf.

Both properties were identical however the one I want is in downtown and the comp was on the outskirts of town. I tried to justify offering $30,000 under asking price due to the comp. This logic didn't work with the seller or listing agent. They advised cap rate was the determining factor. So even though that property sold for less, the rents were probably lower since it wasn't downtown. 

I'm thinking it's a combination of the two. Comps and cap rates for other 2-4 units in the area.