How to Use Sales Comps

[Orie Brown]

Hey everybody, I had some questions about trying to understand how to value a single-family home and a multi-family home using sales comps in the immediate area. I live in and plan to do my investing in the Chicagoland area which is made up of a total of 77 neighborhoods in Chicago and 11 main suburbs surrounding the immediate area. I have identified a couple of main zip codes that are great for investing but I am having trouble understanding how exactly you use comps that have sold in the nearby area within a certain time period. There are so many different types of homes (Bungalow, Graystone, Etc.), home sizes (2/3, 2/4, etc.), lot sizes, garage/no garage. When you go to evaluate a home what do you take into consideration when valuing them? Do you just use the homes in the same neighborhood or do try and use the same street? Do you take into consideration if it is on a busy street, has or doesn't have a garage/driveway, School district, proximity to stores, lot size? I'm curious how if you use those parameters or any other means to evaluate a potential property you are looking to invest in.  

I also had a question about multi-family properties. When evaluating multi-family properties do you use a cap rate or price of multi-family properties sold in similar conditions in that neighborhood? If you do use a cap rate how do you evaluate a multi-family property that is empty?