What's my property worth?

Posted by Cole Carns on November 22, 2017
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Everyone wants to know, “What is my property worth?”

This is a tough question to answer on the spot, especially with multi-family properties. Some properties are more complex, such as apartment complexes or mobile home parks. These deals will have more variables and considerations than others. Approaching a property valuation with educated, thoughtful methodology is far more effective than shooting from the hip. Developing an accurate and realistic expectation for your client is imperative. Our goal at Linville Team Partners is to create long-standing and trust-based relationships. Our clients know and appreciate that we thoroughly research each property prior to giving an opinion of value.

The following are steps you can take to expedite a valuation. They are also common items that most buyers will request throughout their due diligence.

  1. Gather all information on existing leases and current rent roll
    1. How long the tenants have been there
    2. Amount of their security deposits
    3. Length left on lease
    4. Contracted rental amount
  2. Unit Mix and Square footage
    1. Rent roll should clearly define unit mix (1br1ba, 2br1.5ba, 2br2ba, etc)
    2. Size of each unit (square footage) if available
  3. Profit and Loss Statement(s)
    1. Prior 3 years P&L’s are preferred, at least prior year is usually a must
    2. YTD P&L
  4. List of capital improvements within the last 3 years
  5. Aging report or documentation/guidance on age of major systems, such as roof and HVAC units.
  6. General questions: Is there central HVAC or window units with furnaces or baseboard heaters? Who is responsible for which utilities? What units are subsidized/section 8 housing and which are not?

By having these items available, we can provide the client with realistic expectations on listing price. Furthermore, we’ll be able to estimate accurate sales price range after underwriting the deal on our side.

My advice to existing and potential multi-family property owners? Prepare and keep up with your documentation. It will make the process of selling much, much easier down the road. Packaging a deal with all proper due diligence documents usually allows for us to create a smoother transaction that usually yields a higher sales price.

Cole Carns

Written by Cole Carns

Cole joined LTP in 2017 as a Broker Associate. Cole became interested in commercial real estate as a child while watching his father, grandfather, and uncle navigate the field as investors. As he begins his real estate career, he is interested in learning more about the investing an developing side of CRE.

In commercial real estate, property value