Value an apartment building using the income approach: NOI divided by cap rate. See per-unit and per-door pricing to compare multifamily deals.
Apartment buildings and other multifamily properties are valued primarily using the income approach: Value = Net Operating Income (NOI) / Capitalization Rate (Cap Rate). Unlike single-family homes, which are valued by comparable sales, commercial multifamily properties are valued based on the income they generate. This means that increasing a property's NOI directly increases its value.
This calculator takes your gross rental income, subtracts vacancy and operating expenses to compute NOI, then divides by the market cap rate to determine property value. It also shows the price per unit (per door), which is a key metric for comparing apartment buildings of different sizes.
Understanding multifamily valuation is critical for investors making offers, sponsors underwriting syndication deals, and lenders evaluating loan applications. A $100 per-unit rent increase on a 50-unit building at a 6% cap rate adds $1 million in value — this is the power of the income approach.
Homebuyers, investors, and real-estate professionals all benefit from precise apartment building valuation figures when evaluating properties, negotiating deals, or planning long-term investment strategies. Save this calculator and revisit it whenever market conditions or your financial situation changes.
The income approach is the standard for commercial multifamily valuation. This calculator automates the NOI calculation and shows how changes in rent, occupancy, or expenses directly impact property value. Model different scenarios to find your ideal purchase price. Instant recalculation lets you compare scenarios side by side, so every buying, selling, or investment decision is grounded in solid financial analysis.
Gross Potential Income = Units × Rent/Unit × 12 Effective Gross Income = GPI × (1 − Vacancy Rate) NOI = EGI − Operating Expenses Property Value = NOI / Cap Rate Price per Unit = Value / Units
Result: Value = $5,780,000 | Price per unit = $115,600
Gross potential: 50 units × $1,200 × 12 = $720,000. After 7% vacancy: $669,600 EGI. NOI = $669,600 − $360,000 = $309,600 − wait, $669,600 − $360,000 = $309,600. Value = $309,600 / 0.06 = $5,160,000. Price per door = $103,200.
Unlike residential properties valued by comparable sales, commercial multifamily properties are valued by their income. This creates a direct link between operational performance and property value. A $100 rent increase per unit on a 100-unit building adds $120,000 to annual NOI, which at a 5.5% cap rate adds $2.18 million in value.
Cap rates vary by property class (A, B, C), market (primary, secondary, tertiary), and economic conditions. In 2024–2026, apartment cap rates range from 4% in coastal gateway markets to 8%+ in rural areas. Cap rate compression (declining rates) creates windfall gains; cap rate expansion (rising rates) can erode value even if NOI grows.
The most popular multifamily investment strategy is value-add: buy a property with below-market rents or high vacancy, renovate units, improve management, raise rents, and either refinance or sell at a higher value. This strategy works because of the income approach — every dollar of NOI improvement is multiplied into value through the cap rate.
The income approach values property based on the income it produces. Value = NOI / Cap Rate. It's the standard method for commercial properties because investors buy apartments for their income stream. Higher income = higher value, regardless of the building's age or appearance.
The capitalization rate (cap rate) is the ratio of NOI to property value, expressed as a percentage. It represents the investor's expected unlevered yield. A 6% cap rate means the property generates 6% of its value in annual NOI. Lower cap rates indicate higher demand / lower risk.
Price per unit varies enormously by market. In gateway cities, $200,000–500,000+ per unit is common. In secondary/tertiary markets, $60,000–150,000 per unit is typical. The key is comparing per-unit pricing to rents and NOI in your specific market.
Increase NOI by raising rents (renovations, better management, adding amenities), reducing vacancy (better marketing, tenant retention), or cutting expenses (renegotiating contracts, energy efficiency). Every dollar of NOI increase is magnified by the cap rate into property value.
Operating expenses include property taxes, insurance, maintenance, management fees, utilities (if owner-paid), landscaping, and reserves. NOI excludes debt service (mortgage payments), capital expenditures, depreciation, and income taxes. These are above and below the NOI line, respectively.
Because Value = NOI / Cap Rate, a lower cap rate produces a higher value for the same NOI. Low cap rates reflect high demand, low risk, and strong market fundamentals. Investors accept lower yields in exchange for stability and appreciation potential.