Question about determining what my Duplex could sell for...

[Victor Kapustin]

I have a Duplex with both units being rented on 1 yr leases. I bought it for $235,000 two years ago and have made some value-add improvements (like raising rents, adding washer/dryer,etc). This year the Duplex will have an NOI of $21,100. Assuming a 7% cap rate, this would put the property value right around $300,000.

So my question is - if I were to list this Duplex today, would the listing price be determined off of comparables, or off the NOI?

[Nathan Grabau]

This is going to be market specific. Forced appreciation through raising rents is normally not factored into small MF. The dryer/ washer is not a huge value add either. Did you buy it off market/ below market value last year at 235k? What other improvements have you done, specifically any 2k+ fixes? 

It would be hard for me to get in the last 2 years up 28% without a more substantial value add. I know that in most of the markets I watch, 22 is now flat year over year, so you would be assuming 28% appreciation in just 2021 alone. 

What you will need to do is pull market comps to see what this is worth. Small MF is really based on the value other investors are paying for similar properties, ideally duplex's, close to yours, with a similar sq/bed/ bath.