VALUATION OF MULTIFAMILY REAL ESTATE

Construction: It costs approximately $220,000/unit to build new today. Assume the property is 50 years old and it has a 100-year useful life.

Assumptions: Market management fee is 5% Market vacancy is 5% Reserves for a property this age is $250/unit/year Expenses for properties average $4,000/unit/year

a. What is the value using the Sales Approach?

b. b. What is the value using the Income Approach?

c. What is the value using the Cost Approach?

d. What is your final determination of value, and why?

RENT ROLL: Your Apartment Project: Units Avg. Rent Annual Rent 72 $ 1,025 $ 885,600 Comparable Sales Properties: Units Property Webster St. Farwell Ave. Prospect Ave. Comparable Sales: Avg Rent Market NOI Sales Price 64 $ 940 $ 410,966 $ 6,850,000 108 $ 1,060 $ 840,634 $12,925,000 32 $ 1,100 $ 263,608 $ 4,215,000 Weight/Similarity 65% 25% 10% RENT ROLL: Your Apartment Project: Units Avg. Rent Annual Rent 72 $ 1,025 $ 885,600 Comparable Sales Properties: Units Property Webster St. Farwell Ave. Prospect Ave. Comparable Sales: Avg Rent Market NOI Sales Price 64 $ 940 $ 410,966 $ 6,850,000 108 $ 1,060 $ 840,634 $12,925,000 32 $ 1,100 $ 263,608 $ 4,215,000 Weight/Similarity 65% 25% 10%