Re: GRM - Posted by whyK-CA
Posted by whyK-CA on September 14, 2004 at 13:38:08:
I am looking at two completely different areas now. One area has other multi?fs, the other don?ft but zoned correctly according to the seller. I will of course check more, if I am going to move forward with it. My main objective with this thread is to understand the mechanics of appraising smaller multi units in general, though.
?gYou can always appraise it using cap rate if no comps at all.?h
The book I just finished reading said the cap rate is usually 8-12, depending on the market. It is somewhere around 3.5-5.5 over here if I look at all For Sale properites in entire county. I’m not sure where I should get a good cap rate for my area. Should I use average cap rate, in this case 4.5?
With the following date, what would you say, in your opinion, the fair market value of this property should be? $698,888?
Asking price: 879,000
Net Operation Income: 31,450
Cap rate is 3.58
If I use the cap rate of 5.5, the price should be: 571, 818, about $300K below asking price.
If I use the cap rate of 4.5, the price should be: 698,888, about $180K below asking price.
I appreciate your help. Thank you very much.