Key Adjustment Factors for Multifamily Properties

When using the Sales Comparison Approach, what are the physical characteristics that we often adjust for with multifamily properties?

• Location: The area’s desirability to potential tenants, proximity to retail/recreation centers & employment, quality of schools and transit, traffic, and noise.

  
  

• Number of Units: The price per unit typically varies inversely with the number of units at the property due to economies of scale.  Also, properties that contain 16 units or more are subject to the requirement of on-site management in California.

  
  

• Average Unit Size: Larger units naturally garner more rent, while smaller units get less.

  
  

• Unit Mix: A property’s unit mix largely determines the amount of rent it can generate and its value.

  
  

• Condition/Quality: Age, construction, and maintenance level of the property.  Newer properties or those with recent renovations typically sell at a premium.

  
  

• Amenities: Project amenities (fitness centers, pools, sport courts, clubhouses, etc.) and in-unit amenities (washer/dryer, kitchen appliances, patios/balconies, etc.) enhance tenant appeal.

  
  

• Parking: Adequate parking is crucial for tenant convenience and marketability.

These are factors to consider when selecting comparable sales and our adjustments will allow us to quantify how the different physical characteristics impact value.