Inside look at the evaluation process brokers use when preparing to market an apartment building.
Step 1: Gather the Right Information
A proper valuation starts with clean data, usually:
- Current rent roll
- Last 12–24 months of operating statements (T-12)
- Unit mix, square footage, and parking
- Notes on recent upgrades and deferred maintenance
As a broker focused on LA apartments, I also ask detailed questions about tenant stability, lease terms, and any pending work (roof, systems, soft-story, etc.).
Step 2: Analyze Income & Expenses
Next comes the financial picture:
- Normalize income and expenses for a typical buyer
- Adjust unusual, one-off costs
- Estimate a sustainable Net Operating Income (NOI)
From there, we can back into:
- Cap rate (NOI ÷ purchase price)
- GRM (price ÷ gross scheduled income)
- Price per unit and price per square foot
These metrics are then compared to recent sales of similar buildings in your submarket, not just across LA in general.
Step 3: Evaluate Location and Submarket Dynamics
A 10-unit building in West Hollywood is not the same as a 10-unit building in a peripheral submarket. I look at:
- Walkability, schools, and transit
- Tenant demand and rent levels
- Competing inventory and recent sales
Submarkets like West Hollywood, Sherman Oaks, and Studio City each have their own pricing bands, tenant profiles, and buyer expectations.
Step 4: Consider Rent Control, Upside & Risk
Buyers care deeply about:
- Whether the property is RSO or non-RSO
- How far current rents are from market
- The feasibility of value-add work (interior upgrades, ADUs, etc.)
A building with below-market rents in a supply-constrained submarket can still be highly attractive if there's a clear, legal path to higher income over time.
Step 5: Positioning & Pricing Strategy
Finally, I work with owners to decide:
- Whether to price aggressively for maximum exposure
- Or price strategically to drive multiple offers
- Whether an off-market or on-market approach is best
The goal is not just "getting a price"—it's positioning your property correctly so it sells to the right buyer at the best possible terms.
Call to Action
If you're considering a sale in the next 6–18 months, the best first step is a confidential valuation and strategy session. You can request one directly here.