How to value Multi-family properties

[Orie Brown]

Hey everybody, I was wondering how you valued multi-family properties on websites like the MLS when trying to compare to other properties in your area. I know you would usually base it off a cap rate but the thing a lot of the buildings I am looking at are vacant and some need a complete rehab done. How would I evaluate what a good price is to buy it at and what the ARV would be?

For example: Let's say I have located a Duplex that is currently on market for $120K. It's a 5 bedroom/2 bath. The one is 3 bed one bath and the other is 2 bed one bath. There is an opportunity to put in a second bath in the 3/1. It has a full basement and a 2 stall detached garage and separate utilities. The property needs about $40k in repairs. The multifamily is in an up and coming neighborhood in Chicago. The Median Sale price in the area is $260K for a single-family. Rental rates in the area are around $1,400 per month. It is currently vacant and partly gutted. My question is how do you value this deal? Because it is not a single-family and vacant there is no cap rate. 

I was considering two exit strategies: Rehab and turn into a rental property or buy, rehab, and sell. 

If you need any more information to make a decision let me know.