Pricing Rental Property

Is there a certain formula to use when trying to price a rental property?

Comments(1)

  • hibby7612th February, 2004

    Sure is! ....kind of.

    We could have a whole forum dedicated to negotiating. Get them to name their price first. If you name it first, you might be shooting way too high!

    1-2 unit will be priced based on comps.

    3-4 units will be mostly comps, but you'll also take into account income.

    5+ properties use Cap (aka Capitalization Rate).
    Comps may still come into play, but they'll often compare cap rates of similar properties (age, style, location) rather than price. You can also compare price per sq. foot and price per unit. County commercial appraisers can be very helpful.

    NOI/Pice = Cap

    Shoot for a cap of 10% and up.

    Calculate expenses yourself. Don't believe the sellers figures, because they're significantly lower than what they'll really be 9/10 times.

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