Analyzing multi family unit commercial apartment deals

[Chealsea Hayes]

What is the first and foremost thing I’d want to study when analyzing whether I have a good deal or not on a commercial apartment building of 5+ units?

[Brian Garrett]

NOI and market cap rate are the two most important things in determining the value of a building.

The key is verifying all of the numbers (income/expenses) to make sure that the NOI is properly accounted for.

In my market it's common for brokers/sellers to leave expenses like property management amongst others out.

It's also common for them to present a deal based on pro-forma numbers instead of the actuals.

This makes the NOI appear higher which ultimately makes the building look like it's worth more on paper.