The focal point of real estate investment analysis is a rental property. Understanding a property’s location, type, and features are all vital to deduce its market value. However, when buying an investment property, you also need to focus on other investment properties. If you’re looking for a fourplex, for instance, you need to consider other multi family homes for sale before the purchase. These ‘other’ multi family properties are called multi family comps, a type of real estate comps. So, what exactly are real estate comps? What are the 4 ways to find multi family comps? We’ll answer these two questions in today’s blog post!
What Are Real Estate Comps?
For starters, what exactly are real estate comps? Real estate comps, short for real estate comparables, are properties similar to a property you are considering to purchase or sell. By using real estate comps, you will be able to set a price range and identify your property’s market value. With the property’s market value, you can estimate its selling price for a sale, how much to offer when buying or even the amount of rental income to charge.
Because real estate comps are used for property comparison, they need to resemble your desired investment property as much as possible. Rental comps should be in an area within 1 to 3 miles of your property. They should also have been sold recently, or no more than 3 months ago. Other important factors to consider include:
- Property type: multi family home, single family home, townhouse, condo, etc.
- Size in square footage
- Property age
- Number of bedrooms and bathrooms
- Number of floors
- Lot size
- Date of last major maintenance work
- Property features such as fireplace, heating and cooling systems, balconies, garden, parking places, among others
The 4 Ways to Find Multi Family Comps
Clearly, when investing in multi family homes, knowing how to find multi family comps is a must. There are 4 different ways to find multi family rental comps.
1. Conduct a Comparative Market Analysis
The traditional method of finding multi family comps is through a comparative market analysis (CMA). A CMA follows the basic valuation method mentioned earlier of finding an investment property and its comps and deducing market value. CMAs depend on a variety of sources for information. Public county records and real estate websites are good examples. Some of the most accurate sources, such as the MLS, however, are not accessible to investors. CMAs are also notorious for being very time-consuming. It can take several weeks for novice and even skilled real estate investors and agents. While a familiar method to investors, manually conducting a CMA is not the ideal way of finding multi family comps.
2. Hire a Real Estate Agent
Many beginner real estate investors plan on hiring a real estate agent to help them with a first-time purchase. If you fit this description, then you’ll be happy to learn that real estate agents can be great for finding multi family rental comps. After all, agents have complete access to the MLS. In addition, they are familiar with the property sales and values of listings in their respective rental markets. You can also be assured that an agent will negotiate for the best price quickly and effectively.
While hiring an agent can be beneficial, it comes with an obvious cost. These fees tend to be more pricey if you are a seller looking for multi family sales comps. You should also be aware of an agent’s niche before hiring. An agent well-versed in small multi family homes, for instance, might not be particularly helpful if you are looking for apartment complexes.
Related: Working with a Real Estate Agent: What Investors Should Expect
3. Work with a Real Estate Appraiser
Another method for finding multi family comps is through a real estate appraiser. Hiring an appraiser is also cheaper than hiring a real estate agent. Appraisers usually charge a few hundred dollars per property appraisal. However, it is suggested that investors use at least 3 real estate comps in an analysis. So, while an appraisal is cheaper than an agent per property, you could ultimately be paying the same expensive costs working with an appraiser.
Related: When and Why Do You Need a Home Appraisal?
4. Use Mashvisor!
The cons of the three previous methods for how to find multi family comps are either that they are too expensive or tedious. Our final method, using Mashvisor’s real estate investment tools, will save you big on both time and money! Mashvisor’s real estate predictive analytics and interactive tools provide all the information you need when looking for multi family homes for sale. By signing up with Mashvisor, you can obtain access to multi family comps for properties in the US housing market.
Related: What Is Mashvisor? What Can It Do For Real Estate Investors?
Simply type the address of the investment property you’re looking to purchase in the real estate search engine. Alternatively, you can start your search for multi family homes on the platform. Either way, Mashvisor uses multi family real estate data to find rental data that is similar to your investment property. It also considers important comparison features, including location, time of sale, and area. The other comps features, such as property size, age, type, number of bedrooms and bathrooms, and much more are also displayed.
Then, with Mashvisor’s multi family investment calculator, you can study any property in terms of rental income, cash on cash return, cap rate for multi family homes, and expenses for both traditional and Airbnb strategies. With that, you’ll have found your comps and completed your investment analysis in mere minutes!
Bottom Line
In real estate investing, time is money. Searching for multi family comps using a CMA, real estate agent, or real estate appraisal will cost you a lot in both regards. By using Mashvisor, however, you’ll be provided with the most accurate rental comps and investment property analysis in no time at all. Its search tools will also allow you to find whatever multi family property you desire, even the elusive duplexes for sale.
To get instant access to multi family comps, CLICK HERE to start your 7-day FREE trial with Mashvisor!