Analyzing Multifamily (5+ Unit) Properties

[Nicholas Bencivengo]

Hi Everyone,

I'm a bit of a new investor, but I've always been a numbers junkie and enjoy practice with analyzing deals. I think I have the gist of it down for Single-Family & Small Multi-Family, but I'm looking for some advice with analyzing 5+ unit properties. Ultimately, I'm trying to calculate an ARV for once a property is stabilized, and this is proving much more difficult considering a much smaller pool of comparable property sales (compared to single-fam & small multi-fam) and the fact that comps don't weigh as heavily into these property valuations. I understand that from a lending perspective, the property appraisal will likely rely on the income approach. Just wanted to see what others in the Hartford area were using to estimate a property's valuation. Specifically, I was hoping for some better insight on the following assumptions:

- Utilities - Assuming Water/Sewer paid by landlord

- Cap Rate (a quick google search led me to believe that 8% or so was fairly standard for Hartford)

- Repairs/Capex - Do you use a % of rent, % of purchase price, or a set amount per unit?

- Property Management - I understand that 8-12% is fairly standard for long term rentals, but I wasn't sure if lenders used this same assumption for valuing stabilized properties.

Any insight on these assumptions would be very helpful. If you have any advice to offer from a recent closing or refinance, that would be awesome!

Thanks in advance!

Nick