Determining an Offer Price

[Chris H.]

When looking at Multi's, what is the best way to determine an offer price?  I read that comps in the area are a starting point.  Any sage advice out there?

[Immanuel Sibero]

@Alexander Zurn @Chris H.

Correct, in general cap rate comps are used to value MF. But using your example, an MF with 2 units are normally valued using sales comps instead of cap rate comps. This is true for MF with up to 4 units.

The perception that it is tough to find MF deals in a sellers' market when looking at MF with 2 to 4 units is precisely because they are valued using sales comps, so they compete with single family homes.

The "true" MF (i.e. 5 and more units) are always valued by the numbers (cap rates comps) whether in hot or cold market.

Cheers... Immanuel