Property Valuation Calculator
Market Rent per Unit ($):
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The average monthly rent per unit. Market rent is determined by comparable rents in the area for similar properties.
Number of Units:
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Total number of rental units in the property.
Market Occupancy (%):
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The average occupancy rate in the market, or the percentage of time units are expected to be rented.
NOI Margin (%):
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NOI, or Net Operating Income, is calculated by taking total income and subtracting all operating expenses. This margin represents the percentage of income remaining as NOI.
Market Cap Rate (%):
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Cap rate is determined by looking at the sale prices and NOI of comparable properties in the area. It’s calculated as NOI / Sale Price. The average cap rate reflects market conditions for similar properties.
Lease-Up and Reserve Costs ($):
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The total cost of preparing the property for tenants, including renovations and reserve funds.
Risk Adjustment (Basis Points):
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Basis points (bps) are adjustments to the cap rate for taking on additional risk. 100 bps equals 1%. For a riskier deal, a higher bps spread is applied to the cap rate to achieve a higher return for the buyer. This spread depends on factors like property condition, vacancy risk, and market stability.
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