How to determine the value of 6 unit building

[Quincy Miranda]

Hi all!

I recently received a call from a seller that owns two 6-unit buildings right next door to each other. He really wants to get rid of them both because he manages all his properties on his own, and these are adding a little too much work for him.

He is interested in owner financing the property to me. My question is how do I determine the value of the properties?

Where do I begin to start determining the value?

Thank you all in advance for your advice!

[Caleb Heimsoth]

Quincy Miranda you need to take the Net operating income. From my understanding this is the income after all expenses are deducted except the mortgage (P and I) payment. Take this number and divide it by the cap rate for that asset class in that area usually .05-.08. Then that’s the value of the property.

Let’s say NOI is 50k. 50000 divided by say a cap rate of 6 (.06) gives a value of 833k