There are a lot of reasons why it’s helpful to know the value of your property and your portfolio. It’s useful for estate planning. It’s useful for when you want to get additional financing to take on other properties. It’s also just kind of satisfying to know what you’ve got.
At Green Light Real Estate, we offer free, no-obligation valuation services for your multi-family rental properties. Just call or email, and we’ll be happy to get started. It’s definitely better if one of our mutlti-family experts can get into the building, but in a pinch, we might be able to give a valuation without a site visit.
Comparative Sales Method
One method we can use is the comparative sales method. This is the method normally used for single family residential valuation. Basically, what has sold that is comparable? And then, what adjustments need to be made to account for differences?
-Condition
-Size
-Location
-Parking
-Amenities
-Number of units
And more
Income Method
With multi-family properties, we also like to use an income model. In this model, we consider the building more as an asset, and not as a building. We look carefully at the income and expenses, and then look at those numbers using different financial ratios.
Then, we go through similar sales (they don’t have to be quite as similar as with the Comparative Sales Method), and find out what their similar ratios were.
For example, if we find four sales with an average cap rate of 7.5%, then we can make a reasonable assumption that your building should sell for 7.5%. Adjustments can be made here as well, but it gives a good starting point. If your building has net operating income of $17,400, then this model suggests your building is worth somewhere around $232,000.
Then we can apply the same process to different financial ratios, and do a final reconciling of values.
The long and short of it is, contact Green Light Real Estate and we’ll help you figure out the value of your buildings.