Tools for Valuing Rental Housing

Apartment Property Valuation helps users find the value of all kinds of rental housing including large apartment complexes, small multifamily buildings and even single-family homes being used as an investment property.

A good place to start for any user is the Real Estate Education menu on the home page. There, users can find a number of educational articles about real estate investing generally and more about property valuation.

Experienced investors can go right to the tables on the home page to find current median cap rates and gross rent multipliers for small and large housing markets throughout the United States. With just a quick glance, investors will find cap rates and rent multipliers for most US markets.

Those looking to spend a few extra minutes to make a sound estimate of market value can utilize several helpful tools throughout the website. The main calculator on the home page walks users through the process of developing a proforma profit and loss statement, which is the first step in valuing property using the income capitalization approach, perhaps the most commonly used method to value investment property.

Using the Tool

To use the tool, users simply enter basic information about a property, including its location, income and expenses, number of rental units and the year and quality of construction. The automated system then determines and displays a proforma profit and loss statement for the property. This can be extremely helpful for investors who may not have first-hand experience in operating the property being valued. That is because the tool presents operating expense assumptions derived from comparable properties. And for operators have been running a given property for years and know better than anyone what it costs to operate, the tool allows users to modify the automated income and expense assumptions to arrive at the most accurate net operating income possible.

Once a user determines the stabilized net operating income of the property, the valuation tool assigns an appropriate cap rate and shows a value conclusion using the income capitalization approach. It also shows a valuation using the current gross rent multiplier for the market. This way, users can consider a few valuation approaches at once, including their own estimate of market value. The displayed cap rates and gross rent multipliers stem from large amounts of data about comparable rental properties and reflect local market conditions for the class, size and type of property being evaluated.

Value a property

It takes just four minutes