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A good idea implemented poorly is a bad idea.
Don't believe your assumptions are perfect. They never are.
DCF is the best method available to value real estate.*
If used properly!
*Focus on concept; not on formula.
Stoneridge Apartments31544 Freedom Road, Farmington Hills, MI 48336
Price: $2,050,000
No. Units: 96
Building Size: 80,400 SF
Price/Unit: $21,354.17
Property Type: Multifamily
Property Sub-type: Garden/Low-Rise
Property Use Type: Investment
Commission Split: 2%
Cap Rate: 10.05%
Gross Rent Multiplier: 3.35
Occupancy: 96%
No. Stories: 3
Year Built: 1978
100 Unit Apartment For Sale22300 Englehardt, Saint Clair Shores, MI 48080
Price: $3,950,000
No. Units: 100
Building Size: 60,000 SF
Price/Unit: $39,500
Property Type: Multifamily
Property Sub-type: Garden/Low-Rise
Property Use Type: Investment
Cap Rate: 9.70%
Occupancy: 100%
No. Stories: 2
Year Built: 1958
Farmington West Apartments32777 Grand River, Farmington, MI 48336
Price: $2,500,000
No. Units: 48
Building Size: 40,736 SF
Price/Unit: $52,083.33
Property Type: Multifamily
Property Sub-type: Garden/Low-Rise
Property Use Type: Investment
Commission Split: 1%
Cap Rate: 8.34%
Occupancy: 97%
No. Stories: 2
Year Built: 1964
Case Studies
Stoneridge Apts
EnglehardtFarmington
W estLocation Farm ington S t C lair S hores Farm ingtonYear Built 1978 1958 1964No. of Units 96 100 48Building Size 80,400 60,000 40,736Price $2,050,000 $3,950,000 $2,500,000Price/ Unit $21,354 $39,500 $52,083CAP Rate 10.05% 9.70% 8.34%% Occupied 96.00% 100.00% 97.00%No. of Stories 3 2 2
Discounted Cash Flow Analysis
Local Trends
Real Estate Trends
Economic Expectations
Competitor Expectations
Know Return Desired
Know the future
Knowledge Needed of Property
Knowledge Needed From Outside
Property Tax Info & LawsReview of LeasesFinancing AlternativesOperating StatementsCapital Needs Assessment
Zoning ComplianceMarket Rental Rates
On & On & On & On.........On & On & On & On.........
E$timated Value
"Not everything that counts can be counted, and not everything that can be counted counts."
(Sign hanging in Einstein's office at Princeton)