All Forum Posts by: Dovid Staples

@Dovid Staples So here is my take on valuing an empty MF property. Start with the value of the property at market occupancy and market rents and current CAP rate. Subtract from that, my capex expenses, and my holding cost including the cost of money. Subtract the dollar amount that will get my investors and my team a return commensurate to the risk. What i am left with is the value of this property to me.

Now, I have a spreadsheet where I put all of my projections as to how I will get the property to a stabilized position it spits out my investor and sponsor returns.  I can make different adjustment such, cap exp, cost of money, % occupancy each year, rev increase each year, utility bill back rev, etc.  i then can move my offer price up or down until I find a return worth making the offer. 95% of the time the seller won't agree with me, but all I need is the 5% that do.  One project was 48% occupied and I am projecting that at 90% occupancy, it will be worth 3.3 mil in year 2. We paid 1.1mil and expect to put 250k into it.  We have several options on the exit.  We can refi all the capital out and keep it for cashflow and infinite returns, or sell and move onto the next.

If this property was completely empty the offer might have been slightly lower, but not much.  This is a topic that I am very interested in and would love to hear other options.