“In the short run, the market is a voting machine, but in the long run it is a weighing machine.” — Benjamin Graham

Apartment building owners ask me every week, “What’s my building worth?” The honest answer starts with a different question: what does it earn?

If you’d like to know, reply to this email with your building’s address and I’ll send you a free value range. No obligation.

A BUYER’S CRITERIA Buyers of apartment buildings don’t pay for square footage or a nice lobby. They pay for income. They take the rents, subtract the real operating costs (taxes, insurance, repairs, utilities), and arrive at the net operating income. Then they divide that number by the cap rate, which is the return they require, to get a price.

HERE’S AN EXAMPLE A building earning $120,000 a year in net operating income at a 5% cap rate is worth $2.4 million. At a 6% cap rate, the same building is worth $2.0 million. One point of cap rate makes a $400,000 difference. (These are example numbers only.)

WHAT MATTERS That’s why two things matter more than most owners realize:

  • Your numbers. Rents below market, expenses higher than they need to be, or messy records all change what a buyer will pay.
  • The market. Cap rates move with interest rates and buyer demand, so what your neighbor got two years ago may not be today’s number.

SHOULD I WAIT? In nearly fifty years in this business, I’ve seen owners wait for a price the market no longer supports, and others sell for less than they should have because no one ran the numbers. As Francis Bacon wrote, “Knowledge itself is power.

”Knowing your building’s real value before you decide anything is the whole point.

Want to know what your building is worth? Reply with your address, or call me at 714-328-0832.

“Knowledge is far different from information.” Mark Cuban

 

HOW PRS PROPERTIES CAN HELP

Whether you’re thinking about selling, exchanging, or just curious what your building is worth, here’s what we can do for you:

  • Know your value. We’ll give you a current idea of what your building is worth, plus rent and sales comparables in your area, so you know what your units should be renting for.
  • Get ready for a sale. We’ll suggest easy, inexpensive changes that can raise your value, and look for issues an insurer or buyer might ask you to fix.
  • Explore your options. Exchange into a larger or smaller property, or move into something with less management, like a triple net or a DST.
  • Get trusted referrals. We can point you to lenders, contractors, and engineers so you can choose who you feel best with, and help pull together paperwork for a refinance.
  • Get the most at closing. If you sell with us, we’ll put together an aggressive, targeted, professional marketing campaign to bring you the most dollars.

 

WANT TO SELL WITHOUT LISTING? 

We’re currently buying “as-is” properties: low rents, deferred maintenance, even a problem tenant in place. We can offer a 7-day escrow and all cash at closing. We’ve also put together many off-market transactions over the years, including for 1031 investors who need to identify a replacement property before their 45-day window runs out.

  1. Curious what your building would sell for today? Call or email for a free opinion of value.
  2. Want to see what similar buildings have sold for lately? Call or email and I’ll send you recent comps.

 

On the fence? We’ve been doing this for nearly 50 years, and we’re always available to chat. If you’re thinking of selling, or just curious about your property’s value, give us a call. No pressure.