Here's a quick guide on how to analyze an apartment deal in just a few minutes. Step 1: Gather Basic Information Let's use a real deal as an example (Image not related to the post): Asking price: $1.6M Cap rate: 8.68% Units: 21 Unit mix & market rents: 1 one-bedroom: $550/mo 12 two-bedrooms: $700/mo 8 three-bedrooms: $900/mo Step 2: Calculate the Sales Price Per Door Look at similar properties sold recently. Comparable sales price per door: $40,000/unit Value of the building: 21 units x $40,000/unit = $840,000 Step 3: Calculate the Net Operating Income (NOI) Use the cap rate to find the NOI. NOI: Asking price x cap rate NOI: $1.6M x 8.68% = $138,880/yr Step 4: Check the Operating Expenses Assume operating expenses based on the property's age. Operating expenses: 55% Estimated revenue: NOI / (1 - operating expense ratio) Estimated revenue: $138,880 / 0.45 = $308,622/yr Average rent per unit: $308,622 / (21 units x 12 months) = $1,226/mo/unit Step 5: Compare to Market Rents Compare the estimated average rent to the market rents. Market rent: $700 (two-bedroom average) Estimated rent: $1,226 (too high for the market) Conclusion: The property is overpriced based on comparable sales and unrealistic rent assumptions. The actual value is $840K, while the asking price is $1.6M. This is a deal-breaker. What do you think? Would you go for this deal or pass? Do you want to learn more? I'm having a Zoom training tomorrow, May 29 at 8 PM EST on 'How to Analyze Apartment and Hotel Deals'. If you want to join, comment below and I will give you the Zoom link. (photo not related to post)