What is a fair price for a MF property with NOI of $185000, garden variety, class c

In Selling Property - Asked by Marsha S. - Jun 10, 2010
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Answer(s)

Ivan B.
Owner/Investor
Clearwater, FL

Fair depends on the buyer and his or her future plans and intent.
You can give yourself a starting idea by knowing the NOI (net operating income) and the CAP Rate then apply the formula:
NOI / Cap Rate = property value or Purchase Price
This will give you a "ball park figure" to continue to do your due diligence.
Blessings, Ivan

Jun 10, 2010
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Ian H.
Owner/Investor
Atlanta, GA

If you need a further frame of reference you can look around at the cap rates of comparable properties on the market or sold in the same area and then use the formula Ivan provided. Hope it helps.

Jun 20, 2010
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marcie s.
NASHVILLE, TN

I would look at cap rates on recent sold comparable properties in the area. What is the going cap rate of these properties? Determine your acceptable cap rate and use this to evaluate properties. As the previous answer stated... Take asking price/NOI= Cap Rate

Jul 18, 2010
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Leah H.
Broker/Agent
Hopkins, SC

Hi Marsha,
I know this is an older post. However, I thought I'd contribute knowing you'll be notified that an additional reply has been submitted.
I'll utilize three cap rates for your review:
1. A cap rate of 6% (areas of higher appreciation) a fair price (value) is $3,083,333.30
2. A cap rate of 8.5% a fair price is $2,178,470.60.
3. A cap rate of 12% (areas of low appreciation) a fair price is $1,541,666.70
The class c aspect doesn't impact the cap rate/value as much as the area of the country, type of property and other comparables. I think however as a guide for a class c property in an average area of the country with moderate appreciation I would look for a cap rate between 8.5-10%. The 10% cap rate fair price is obvious :) $1,850,000.
I hope this helps.
Regards,
Leah Henderson
(803)566-0023
leah@exitcolumbiasc.com

Dec 7, 2010
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