Multifamily Property Valuation

[Davit Gharibyan]

Hi fellow investors.

I was evaluating a 88 unit complex and based on T12 financials it runs 69% expense ratio. Based on the actuals it is worth $4.2mm.

Now the property doesn't have a listed price and they are looking for the highest market bid. However they have mentioned they are looking for an offer in $9mm range, which is based on around 50% expense ratio.

The property is obviously mismanaged and has a high expense ratio. The deal is to reduce the expenses to increase the value, and the rents are below market so there is a potential there as well.

How would you come up with the valuation? Based on the actual financials or the story that the broker is selling?

Your feedback is greatly appreciated.