Income Approach for Apt BLDG

General Real Estate Investing
1

Have anyone every used the Income approach to calculate apartment building value

Where not able to locate any good comps to determine ARV

Real Estate Broker requesting we use Income Approach

We have the

  • rent roll
  • potential purchase price
  • potential rehab budge

Any suggestion?

2

You will need to figure out your vacancy and expenses for the property. Then derive a cap rate based on your financing costs and your required return on equity. Once you have your NOI and your cap rate figure out your what the investment value is based on your cap and NOI. Once you have your value subtract the cost of repairs from that value to get your offering price.

You could do a discounted cash flow analysis but for simplicity the former is probably your best bet.

3

okay, I will try that

Thank You , Sean_L

4

If you need help or have anymore questions let me know…