Multifamily Valuation!

Multifamily represents any property that is 5 units or more. Units being the number of individual living spaces.

There is a different way to look at these properties as the value is no longer determined the same as in the residential space.

Residential property (1-4 units) values are determined by comparables (or what is known as comps.) What are things selling for in the area? What features do these properties have? Comps are the price they are currently selling for.

However, when you get into Multifamily, their values are determined by Net Operating Income (NOI) rather than comps. Each property brings with it varying amounts of income and expenses so it is unfair to use comps in this regard. No two Multifamily properties are the same!

The big question then becomes how to increase values? That part is simple. To increase value on a Multifamily property, you can either increase income or reduce expenses…when the NOI increases, the value of that property has also moved upward. When expenses drop, NOI increases. See the inverse relationship there? The higher the income, the higher the asset value.

This is why my team looks for properties that have a value add component where we can come in and make changes to then increase the value substantially. Maybe these opportunities are obvious such as pet rents or W/D hookups, but in some cases they are not. It takes putting multiple heads together, thinking creatively and working collaboratively to determine the various ways that we can increase returns for our investors.

So, if you're interested in learning more, fill out the form or book a call with me! Would love to get to know you, your investment goals and what you are looking for!


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