Small Multifamily Analysis

[Monico Lorenzana]

Hello BP Forums!!! 

I was recently contacted by a wholesale connect of mine who pitched a Duplex to me. I'm currently not in a position to jump on another project as I'm still working on one at the moment. But the situation did get me to start thinking on how to properly analyze a small multifamily house.

I've only invested in SFRs so I'm a little green when it comes to properly analyzing a duplex. Would I just look at comps like I would with a SFR? How would I value it if my plan was to erect another unit? If a duplex rented out for 2k per unit, would adding another unit be an additional 2k in rent, or would it dilute the property and make the rents lower.

Any advice or input would be greatly appreciated. 

[Paul Samuels]

Hey @Monico Lorenzana!

Great questions. 

To start off, yes, I would analyze a duplex just like how I would with a SFR. IF you wanted to add another unit it would become a triplex so you would do comps for triplexs. Keep in mind that you would have to get permits and such for a project like that. It wouldn't make the units of lesser value unless you make it into a one bed one bath, for example, and the others are 2 bed, 1 bath. You can treat each unit individually in charge, I would suggest, whatever the market rate dictates.

I hope this helps!