How does a price of multifamily increase in value?

[Jason Nguyen]

Hello everyone,

I recently bought a fourplex in Atlanta, GA for $500k with 25% down conventional loan, and the previous owner rented it out at a price way under market value. I then spent nearly 30k to fix up all 4 units and did a turnover on all of them. I found new tenants and raised the rental price up to the fair market value and all units all now occupied. Currently, I cash flow at $700 per door or $2800 for all 4 units. If I want to sell this fourplex to another investor, how much do you think is fair? I understand that multifamily goes up when rental price increase but how exactly does it work in this case?

Thanks!

[Mack Benson]

You might be able to float it around investor circles and try and use your current NOI to set a price but @Brian Garrett is right, a quad is going to be valued based on comps. You may be able to show your renovation and improvements to increase the value but it will still rely on an appraiser who will rely on local comps for the value. 

The NOI doesn't matter until you get to five or more units, then increasing the income has a direct impact on the value of the property.