Adapting the 70% Rule for Multi-Family

[Seth C.]

Since property value of MF is determined by NOI and CAP rates, there are three ways to affect property price: Revenue, Expenses, and CAP negotiations.

Specifically in the 20-100 unit space, if we define market as average rents, average expenses, and average CAP, my question is whether 70% below market is enough in MF, or if we really need a 60% Rule?

To break it down, What would be a) minimum below market rents/above market vacancies, b) above market expenses, and c) better than average CAP rates that you would consider to be bare minimums to consider a deal?