NYC Rent Stabilized Multi-family Acquisition Price

Fedha's picture
Rank: Chimp | banana points 14

How would value a NYC MF property with 36 units where 30 units are being delivered vacant (purposely, to allow buyer to renovate), and the remaining 6 are rent stabilized? Are cap rates/property values impacted from the upside potential of bringing rent stabilized units to market? You purchase a property for its future cash flows but since this barely has any how do you value it? Would you run a DCF and make adjustments for lease-up costs, capex, and estimated buyouts of the rent stabilized units?

Any input helps. Thanks

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Comments (3)

Nov 14, 2018

Do the vacant units actually need renovation to re-let or can they be let in their current state?

There are a few ways too look at it but yeh you could run a cash flow and come to a reversionary value.

Nov 14, 2018

Yes, the vacant units, as well as the building, need to be renovated.

If you run a DCF you're making assumptions for lease-up timing and market rents and growth rates, etc. How would factor these into the purchase price?

Nov 14, 2018