How to determine the value in 8 plex

Hello All,

I have been reading this site for a few months and I need help finding the value of an 8 plex. I just found the building today and I don’t have all the details yet. Here is what I know so far: The building is about 20-25 years old 100% occ with 7 2bd and 1 1bd. The 2bds go for $375 and the 1 bd is $325. I do not now what if any utilities are included in the rent. The roof looks good and the grounds are simple and neat. The unit is located in Ft Wayne, IN with a price of $225K. The owner is willing to carry some of the money. Is there a simple formula you use to determine the basic value of apt bldgs? What cap rates do these things go for? I have some experience in residential and MHPs, but not Apt’s. If the DSCR is at 1.2 and my FICO is over 700 what options do I have for financing and what rate should I expect? I will add details as I get them. BTW, I live in soutnern Ca, but travel to FT Wayne regularly.


Forget about cap rate - it’s useless in my opinion. However, here in Ohio I have a 6 unit with almost identical rents ($375) and I paid $88,000 for the building. Cap rate is 22% (again useless).

Here’s how I’d evaluate the property.

Do a cash flow analysis with the normal expenses (don’t forget any utilities paid by the owner, mowing grass, shoveling snow, and maintaining/cleaning common areas). The positive cash flow MUST be AT LEAST 1/2 of the mortgage payment and be high enough to be worth the hassle (I like $200 per unit per month). Mine has a positive cash flow of almost $12,000 per year and the mortgage payment is only $8,500 per year on a 20 yr term.

This is a decent return but DEFINITELY NOT GREAT! You have higher everything with low income rentals. More evictions, more exterminations, more tenant squabbles, more damage caused by tenants, etc. The cash flow needs to be high enough to account for all of these additional expenses.

Good Luck,


90% LTV is available…Expect a 30 Year fixed rate to range between 10 and 10.5%.

2950/mo Gross
295/mo Vac and Loss (10%)
250/mo MGT (8.4%)
150/mo Maint
150/mo Repair
1852/mo P&I

$252/mo = not enough to cover taxes and ins…or utilities…or profit.

Doesn’t look like a good deal at all but why is the rate so high? 10-10.5%?

90% LTV 30 year fixed

Just sounds kinda high because I have seen over 90% LTV at 7.5 - 8%


Please point the way

To name one, Jeff/Crusader Commercial on this site has 100% apartment bldg loans in the form of a 90/10 combo loan. Rates are around 7.5% for first and 9.5% for second.

I would just find it really difficult to cashflow with a rate over 10%.

One…Thats for 20 unit+ deals.
Two…It does not say that the rates are fixed, term or amortization on the loan. It could be a 1 month ARM on a 5 year term for all you know.

Lesson 1:
No one…repeat know one beats the market. The market makers in New York, London, Dubai have dictated that 90% LTV multi-family commercial loans, fixed for 30 years are going to go for about 10% right now.

…Jeff is not a market maker.

So did we find the man behind the curtain? Jeff has been controlling the market all these years?

Wow, and I have been wasting all this time watching the markets. :banghead:

Note: I never said he was.

A broker I work with actually uses them for commercial deals. Though I never got it in writting, she informed me that it was fixed and was 30 yr ammort. Never knew the term.

I would just find it hard to cashflow at that rate.


It’s an open secret in the mortgage business that everyone has access to the same products.

At that rate the subject property cannot cash flow. Then again it’s 90% LTV and the property is overpriced.

…well, everyone except Mark. We hide the good stuff from him.

See! I knew it! You are hiding all the good info from me! :smashpc:

The next thing you know…Elvis is gonna show up! and then you are gonna tell me that the Easter Bunny is not real!

…And sweetest day is a holiday made up by the international greeting card syndicates to increase their sales. ;D

STOP! :cry:

Great replies, so what is a good price for the subject poperty?

The next thing you’re going to try to tell me is that you mean Valentine’s Day!