A Guide to Multifamily Property Valuation
Understanding how to value a multifamily property is essential whether you're buying, selling, refinancing, or simply monitoring your portfolio. This guide explains the key methods used by professionals.
The Income Approach (Primary Method)
For multifamily properties with 5+ units, the income approach is the gold standard. Here's how it works:
- Calculate Gross Potential Rent (GPR): Total rents if 100% occupied
- Subtract vacancy and credit loss (typically 3–5% in LA)
- Subtract operating expenses (property taxes, insurance, management, maintenance, utilities)
- The result is Net Operating Income (NOI)
- Divide NOI by the market cap rate to get estimated value
Understanding Cap Rates in LA County
Cap rates in Los Angeles vary by submarket and property type. In 2024–2025, multifamily cap rates in strong LA submarkets ranged from approximately 4.0%–5.5%. Lower cap rates indicate higher demand and lower yield; higher cap rates suggest more cash flow relative to price.
The Sales Comparison Approach
This method looks at comparable sales (comps) — similar buildings that have sold recently in the same area. Adjustments are made for differences in size, unit mix, condition, and amenities.
Maximizing Value Before You Sell
You can increase your building's value by reducing vacancy, documenting below-market rents (showing upside), completing deferred maintenance, and pulling permits for any unpermitted work. Samimi CRE Advisors offers free pre-sale consultations to help you maximize your outcome. Get a free valuation.