Would you use a cap rate analysis to analyze a duplex?

[Nina Davenport]

I am unclear as to when to use NOI and Cap Rate to analyze a rental property. I am thinking of duplexes now - what is the best way to evaluate? Is the cap rate method only for multi units over 4?

[Brad O'Neill]

Cap rate is for commercial, which for apartments is 5+ units. Don't use cap rate for 4 and below because nobody else will value it based upon how well you hold down expenses or increase income. 4 and below is residential and values are based on comps alone.