Finding the value of a property based on its rent

[Mark Davis]

I'm evaluating several properties. I have a good idea of the ARV value of each property. What I'm wondering is what I should offer based on the current rent numbers. So I know the rent and expenses. Can I use these numbers and figure out what cash price to pay?

[Brent Coombs]

@Mark Davis, for residential (1-4 unit), their rent has zero impact on their value! Why? Because largely, they're sold to owner-occupiers!

And what do owner-occupier-Buyers/Lenders want to know? The value of sold comps (only)!

So for these, you just need to work out how much less than ARV you care to go.

But if you're talking commercial (5+ units), then yes, rent is very important in helping determine value, because their market value is heavily influenced by the market cap rate there! My 2c...