How I value a Florida apartment building
I value a Florida apartment building on its income first, then I check that number against real sales and against what a buyer's lender will actually fund. I use true Florida expense loads, not the soft ones that inflate an offering memo, and I hand you a range, not a false-precision single number. The goal is a price that survives underwriting and closes, not a headline that dies in due diligence.
Income first, because that is what a buyer pays for
An apartment building is worth the income it throws off. I take the net operating income, the rent left after real operating costs, and divide it by a capitalization rate set by the property's Florida market tier. Cap rates in the segment I work, sub-$3M multifamily, generally run about 7 to 8.5 percent depending on location and condition. A tighter cap means a higher value per dollar of income, so getting the tier right matters more than any single line item.
I then cross-check that income value against a gross rent multiple, and I clamp the result with per-door ceilings and floors so one unusual input cannot push the number somewhere no buyer would follow. That clamp is what keeps the estimate honest.
Real expenses, not the memo version
Most inflated valuations come from underwriting expenses too low. In Florida the number that moves the most is insurance. I underwrite it around $1,200 per unit today. It sat closer to $400 a unit back in 2013, and pretending it still does is how a deal falls apart at the lender. I load maintenance near $700 per unit, lawn care near $100 per unit, and management at market even when an owner self-manages, because the next buyer has to pay someone. I also reset property tax to roughly 80 percent of the likely sale price times the local millage, since Florida reassesses on sale and the buyer inherits that new bill, not the seller's old one.
Then I check it against the market and the lender
Income is primary, but it is not the only lens. I reconcile the income value against recent comparable sales, weighting the comps by how good the data is. When the two approaches diverge sharply, that is a flag to slow down and find out why, not to average the difference and move on.
The last check is the one most brokers skip. A buyer borrows most of the price, and the bank sizes that loan off the income at a debt coverage ratio and a loan-to-value limit, using today's rates. If my value sits above what a lender will fund, the buyer pool shrinks to cash and 1031 money, and the property sits. So I price it to survive that math. That is the whole difference between a number that sounds good and a number that closes.
Common questions
What cap rate should I use for a Florida apartment building?
For sub-$3M multifamily I generally see 7 to 8.5 percent, tighter in stronger locations and wider for older or rural product. The right rate is set by the market tier and condition, so treat any single number as a starting point.
Why is my building worth less than a website estimate said?
Most automated estimates underweight Florida insurance and taxes and assume no management cost. When you underwrite real expenses and a real post-sale tax reset, the supportable value comes down to what a buyer can actually finance.
Do you charge for a valuation?
No. Run your building through my model and I will send you the range and the reasoning behind it. I list at a 4 percent commission, paid only at closing.
Run your building through my model.
It takes about a minute and you get a value range with the logic behind it. Start the valuator or call me directly at 321-275-KING. The King answers his own phone.
Christopher Minchin, Florida Broker BK3282270. The Apartment King, Florida multifamily under $3M. Investment sales, management, and financing. The King Closes.