Analyzing multi-family vs. single-family rentals?

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I am a new investor looking to invest in buy and hold, small multi-family properties, using the BRRR strategy. What is the difference between analyzing multi-family vs. single-family?

Is it correct that the ARV for small multi-families is based on your NOI and Cap Rate? Or is it still depended on comps?

Hello Einat!  In general, the more units, the better. Yes, loans are made based on net income.  Usually, you have more than one unit at a particular or at the same address.  Getting "add value" property is better for you by raising the rent or improving the property.  That area usually defines what you should do.  Do not try to be the "front runner" when you are starting out.  Just do what is average in that subject area. You may have to plan on capital expenditures.  Good luck to you!

@Einat Menashe

The matrix below may help with terminology and comparison/contrast across the various property types, the information is general in nature and there are of course exceptions:

So based on the matrix above, your question:

Is it correct that the ARV for small multi-families is based on your NOI and Cap Rate? Or is it still depended on comps?....

is ambiguous. If by "small multi-families" you mean 4-unit or less apartment then ARV is generally determined by recent sales comp (i.e. commonly referred to as "comps"). If by "small multi-families" you mean 5-unit or more apartment then ARV is generally determined by recent cap rate comp (i.e. commonly referred to as "NOI and cap rate" or "income approach").

The common view is that there is this big difference between valuation based on "comps" and valuation based on "cap rate". Conceptually they are the same - both valuations use recent transactions of comparable properties. So technically both valuations make use of "comps". Valuation of residential properties looks the sale amount of recently sold comparable properties. Valuation of commercial properties looks at of the cap rate of recently sold comparable properties. So BOTH valuation methods make use of recently sold comparable properties (i.e. "comps").

Cheers... Immanuel
 

Originally posted by @Einat Menashe :

@Immanuel Sibero Thank you for sharing that table. It is very helpful! How can somebody find the Cape Rate of an area? 

I would contact the local real estate professionals who are familiar with the market in that area - commercial brokers/lenders, apartment syndicators, property managers among others.

Cheers... Immanuel