How to find ARV for 10-unit Franklin Park

[Joe Freeman]

Hello my Chicagoans and others, hope you're staying warm on this frigid day! 

Looking at a 10 unit (all units 1bd/1ba) and don't feel comfortable giving client an ARV price because there's not much data for these type of properties in the vicinity of O'Hare airport that I have found. I've looked in Schiller Park, Elmwood Park, Melrose Park, Franklin Park, and the other villages/towns that surround Chicago's O'Hare airport.

I was able to calculate the rental prices for the units after they are rehabbed. Currently they are fetching $750, but some of the tenants are 10-15 year tenants and that is the reason the rent is low. Units are in very suitable condition, but after seeing some comps for updated 1bd/1ba apartments in the area, I believe the units could bring in $1,150. The pro-forma (I know to take this number with a grain of salt) comes out to $5,081 in net profit per month after expenses, management, vacancy, and maintenance has all been accounted for. 

Based on netting let's just say to be conservative $4,000 per month after rehabbing the units, what do you feel that the asking price for a 10-unit (1bd/1ba mix) that brings in $4,000 per month could go for near Franklin Park? 

[John Warren]

@Joe Freeman I am pretty sure I have been in the 10 unit you are talking about. I doubt you can get anywhere near $1,150 for rent, and I would guess your real rental rate for a nice unit would be closer to $950-995. You also would want to dig into the town inspection as Franklin Park, like many near western suburbs, has a rigorous point of sale inspection. 

For comps, you will find plenty of comps on Costar or a similar platform. This is a space where most of these buildings are sold by brokers focused on commercial RE who have access to different tools than the MLS.