Multi Family Analytics and Ratios

[Joshua McIntire]

Hi,

I just joined BP and have been looking around to see if anyone has a detailed list of the standard valuations items for apartment Investing or underwriting criteria? Also do you know where to go to find standard values/metric for these catagories and specific areas? (I.e. gross rent multiplier, cap rate, price per unit, etc).

[Arn Cenedella]

@Joshua McIntire

Sadly, it’s not that straightforward.

The metrics vary by location and asset class.

Cap rates can range from 3% in Los Angeles, Dallas Ft Worth or Austin to 8% or higher in small “podunk” town locations. Any other metric has the same variance.

My best advice is to pick a couple of markets and start to follow every Multifamily property that comes on the market. Look at EVERY deal in your market, talk to every broker in your market, attend local or online investor meetups. Track when these properties sell, find out what they sold for. You will gradually get a sense of the market by BEING IN IT. Track rental rates too.

Publications like CoStar or CBRE publish various articles in the local markets. Many can be found online. Commercial brokers typically have CoStar access. Build relationships with brokers. Network. Plug in to the local markets of interest.

Be aware there are sub markets in every city, each with its own investing metrics.

After 3 to 6 months of activity, you will begin to get a sense of the market and be able to invest confidently.

There are no shortcuts here. Commercial real estate is not like residential real estate. With residential real estate, 98% of the properties are in mls and so everyone has access to the data. Commercial isn’t like that.

Excited for you to get started. Have some fun learning the markets, build relationships, find partners.

👍