Analyze Multi Family Deal Question

[Will Gebbie]

Hello all,

I am a newbie and whenever I go on Loopnet and look at multifamily listings, I notice that a lot that on financial Summary's are exaggerated. For example, today I was looking at a 4-plex listed at $400k at a 6% cap rate, and the listing agent provided the NOI broken out but didn't include anything for maintenance/repair costs or project management. When adding about a $1/SF/year for repairs and 10% property management and still using a 6% cap rate I was then looking at a offer price of $270k. Would this be something that I could use to justify a low offer, or do cap rates usually not account for Property Management and such? Also I know 4 units and under fall under residential property's, thus relying on recently sold properties as comps but I was wondering if this logic can still be applied.