How do buyers actually calculate the value?
The formula is simple: Value = NOI ÷ cap rate. NOI is your collected income minus operating expenses (before the mortgage). The cap rate is the return buyers in your market demand for that type and quality of building.
Illustrative example (not a real property)
- 10 units renting for an average of $1,000/month → $120,000 gross annual rent
- Operating expenses (taxes, insurance, maintenance, management): $48,000
- NOI = $120,000 − $48,000 = $72,000
- At a 6.5% cap rate: $72,000 ÷ 0.065 ≈ $1,107,000
- At a 7.5% cap rate: $72,000 ÷ 0.075 = $960,000
Notice how one percentage point of cap rate moves the value by roughly $150,000 — this is why documented income matters more than square footage.
What raises or lowers the value?
- Actual rents vs. market rents. Below-market rents lower today's NOI but can make the building more attractive to a buyer who sees the upside.
- Occupancy and tenant quality. Stable, paying tenants support the valuation; heavy vacancy or collections problems drag it down.
- Deferred maintenance. Roofs, boilers, and plumbing a buyer must fix come out of the price — being upfront about them leads to more honest offers.
- Location and market size. Buildings in or near major metros trade at stronger cap rates than remote markets.
- Verifiable books. A clean T12 and rent roll can be worth real money, because buyers discount what they can't verify.
How do I get a real number instead of a guess?
Gather three things: your trailing-12-month income and expense statement, a current rent roll, and a note on any major repairs the building needs. With those, a direct buyer can give you a researched, private offer — usually within days, with the math shown.
Want to know what your building is worth to a direct buyer?
Tell us about the property and we'll follow up discreetly. No public listing, no commissions, no pressure — or text us at 202-932-7527.
Prefer the full overview first? Visit invest.simplysolvd.com
Frequently asked questions
- What is a cap rate in simple terms?
- A cap rate is the annual return a buyer would earn if they paid all cash. It's the property's net operating income divided by its price. A building producing $60,000 of NOI at a 6% cap rate implies a value of $1,000,000 ($60,000 ÷ 0.06). Lower cap rates mean higher prices; higher cap rates mean lower prices.
- What is NOI (net operating income)?
- NOI is the property's real annual income after operating expenses: collected rent and other income, minus taxes, insurance, utilities, maintenance, management, and similar costs — but before mortgage payments and depreciation. Serious buyers value buildings on actual trailing-12-month NOI, not projections.
- Why does my T12 and rent roll matter so much?
- The trailing-12-month statement (T12) shows what the building actually earned and spent over the past year, and the rent roll shows current tenants, rents, and lease terms. Together they prove the NOI. Without them, any valuation is a guess — with them, a buyer can give you a firm, defensible number.
- Do online estimates work for apartment buildings?
- Not really. Automated home-value tools are built for houses, which sell on comparable sales. Commercial and multifamily property sells on income, so two identical-looking buildings can be worth very different amounts if their rents and expenses differ.
- Will a private buyer just lowball me?
- A credible private buyer values the property on its documented income and explains the math behind the offer. You see how the number was reached, and you're free to decline — there's no obligation at any point.