The way we comp multi family is different from how we comp single houses. The appraisal rules I've share with you all does not apply to multi family. Multi family properties are income- approached. It's based on the net operating income or the gross income. You's also take into consideration if the market is a high demand, high appreciation market or a low demand, low appreciation market. Keep in mind that in a high demand, high appreciation market, a multi family buyer will look for a 1% return in gross rent, while in a low demand, low appreciation market, your multi family buyer will look for a 2% return. Take note that values have decreased dramatically in multi family because of the interest rates. My tip is make some phone calls to commercial brokers in the areas where you're working on multi family deals and find out what the average cap rate that multi family properties are being sold at. That way you'd know if you actually have a deal or not.
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