Estimating the ARV of a small multifamily

[Marta Frey]

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,

[Patrick Fraire]

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.