Multi-family always over priced?

[Bryan H.]

So as I evaluate multi-family properties in areas that I would like to purchase, it always seems like they are WAY overpriced. Maybe I am doing something wrong, so I am looking for help.

Here is an example property

Based on my calculations

8 units x $580/mo x 40% (water/gas LL paid) x 12 months x 10 CAP = $222,720 purchase price

Using that formula, my purchase price is never close to the asking price. So, am I doing this right? Are the sellers looking for a sucker?

[Bill Gulley]

Common, multis are owned by investor/operators, like buying a used car off a dealer's lot, they are all over priced. Larger investor types may have better tax advantages and may accept much lower cap rates for depreciation and expenses. Always make your offer in line with your best interests, ignore asking prices. If they don't ask for a higher price they will never get one! If they really want to sell it, they will negotiate any reasonable offer. Continue to march to your drum! :)