How to run comps on a multi-family

Question

Is there anyone that can help me run comps on a multi-family in C.T.

Erica Osborn · Answer

Hey Joseph! If you are analyzing a residential MF deal (4 units and under) you can use basic sold comps of like properties, an agent can help you identify sold and listed comparables and if you are super comfortable running comps for yourself, Zillow and Redfin will give you a head start to see what has sold in the area.

When you are talking about commercial MF (5+ units), this is where you need to analyze the deal based of of the current rent roll and trailing 12 month profit and loss (provided by the seller) come up with the Net Operating Income and then an area commercial agent should be able to give you the area cap rate (capitalization rate) that like properties are trading at. You then apply that cap rate to the NOI and boom you have your value. NOI/CAP Rate = Value. This is a very basic description, but there are tons of videos on Youtube to help you through a basic eval. MF is a different beast, but can be a blast!!! Good luck!

Dave Spooner · Answer

@Joseph Ayala As a couple people have mentioned, I would recommend first trying Zillow or Redfin for basic sold comps of similar properties.

If you are still having questions or are wondering where to start, there are some blogs out there (Zillow, Trulia, Redfin, etc.) that have articles on comps. You can also find some resources on comps on BiggerPockets as well: https://www.biggerpockets.com/rei/real-estate-comps-house-value/

The most important part that people have alluded to is just learn and practice as much as you can. As you progress your workflow and process will become much quicker.

Isaac S. · Answer

Cost per door, rent per sq. ft, cost per sq. ft., cap rate....are good places to start

Jerryll Noorden · Answer

Dude and you are nearby too! You have the beer... I take a Shirley temple and you have a date!

Andrew Carlson · Answer

@Joseph Ayala

Here’s how they did it in the old school...

Go door knocking at similar apartments in the area and find out what people are paying for rents. Run your numbers based on those rents and you should be able to get an idea of what you can pay for the building. Never done this personally, just know a guy.

Jaysen Medhurst · Answer

@Jerryll Noorden, sounds like you and I are due a good ol' rant session over a few beers, virtual or otherwise. We can start with wholesalers and then move on to "syndicators." You know the ones. They started a podcast to be a "thought leader," have never done a deal, and confuse CapEx with Cap Rate.

Jerryll Noorden · Answer

No man. Your advise was solid. It is an agent that needs to do this. But like you said... you will have 3000 wholesalers asking agents to do comps for them, and I feel like wholesalers need to step up a bit. I always see them  asking for mentors, and shortcuts and this and that. Wanting to do MLS deals. Wanting to wholesale auction houses.... NO!

NO!Bad wholesaler. BAD!

When I started I did it all myself. I learned and I practiced. and unless you do, you will fail!

So  no my dude. Your advice IS solid. Just added to it so that it is wholesaleproof.

:)

Jaysen Medhurst · Answer

Fair enough, @Jerryll Noorden. I was coming at this like a new investor, not a new wholesaler.

Jerryll Noorden · Answer

Actually Mr. Jayson, I wouldn't use an agent for this.

Well let me rephrase.

You totally can use an agent of course...

But that is not why they are there for.

In my business, there are some things that will make you or break you FAST.

Lead generation is one. Do not rely on someone else to get you leads. LEARN IT! I do it myself and well.... I get plenty of leads now.

ARV's comps... if your agent makes a mistake... man!! Learn how to do it. This one is important. If you are an investor, this is a skill you need to master.

Jaysen Medhurst · Answer

This is what your agent is for, @Joseph Ayala.

How to run comps on a multi-family

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