Well basically, an appraiser is going to determine value by taking the net operating income and dividing it by the market cap rate. It's kind of hard to figure out what the market cap rate is without talking to a local commercial appraiser, but you can figure out the net operating income.
Look at your market and see what apartments are renting for in that area. A good website to use for that is www.rentometer.com. You're probably going to get numbers all over the place, but since you plan on renovating the apartments, then it's safe to use rental figures toward the higher end of the spectrum... But not too high. You still want to be a little conservative with your figures. The closer to your building, the better. Add up all the monthly rents from the apartments, and multiply by 12 to get your gross yearly income from the building.
Now you'll need to figure in expenses. Appraisers will automatically take about 5% of the gross income for anticipated repairs, and another 5% for anticipated vacancies. I have no idea what water bills are like in your market, but here in Philly in my experience it's been about $25 per month for a 1 BR apartment. So I would estimate about $150 per month for that building, or $1,800 per year. If there are any common areas that are lit, then you would have to figure in a small electric bill (maybe another $25 per month or $300 per year). If you plan on managing the building yourself, then that's fine. If not, then deduct another 7-10% for property management.
Take the gross yearly income, subtract all the expenses I mentioned, and you have your NOI (net operating income). Example below:
Six 1 BR units rented at $600 per month = $3,600 per month and $43,200 per year in gross income.
$43,200
-$2,160 for repairs
-$2,160 for vacancies
-$1,800 for water
-$300 for electric
= $36,780 net operating income
