How Much Is My Apartment Building Worth?

Your apartment building is worth its income divided by a cap rate. That's the honest one-sentence answer, and it's the same method every serious buyer and every lender uses. Figure out what the building really earns in a year after honest expenses, then divide by a cap rate that fits your market, and you have your value. The trouble is that almost every number an owner starts with, the rents, the expenses, the taxes, is a little too rosy, and rosy inputs produce a price the market won't pay. So let me take you through it the way I'd price your building for real, honestly, line by line.

Step 1: Start with the real rent, not the hopeful rent

Add up what your units actually bring in today, times twelve. Not what they could rent for after you renovate, not the "market rent" a report suggests, what's on your actual leases right now. Future rent is a project a buyer takes on, and they won't pay you full price today for work they'll have to do tomorrow. I get into how sellers and brokers dress this up in my piece on offering memorandum red flags, but the rule is simple: value is built on in-place income.

Step 2: Take out honest expenses to get NOI

Net operating income is what's left after the real cost of running the building, before any mortgage. This is where most valuations go wrong, because it's where the optimism hides. A few lines I always make sure are honest:

Management. Put a real management fee in, usually around 10 percent of collected rent, even if you self-manage. Your time isn't free, and the next buyer will price it whether you did or not.

Insurance. Use a current Florida quote, not the number from when you bought. This line has climbed hard, and an old figure can hide thousands a unit. I've watched insurance alone erase real value, which is why I wrote a whole post on Florida apartment insurance costs.

Taxes. Use the reassessed number, not the seller's. The county resets the assessment when a building sells, so your bill will likely be higher than the current one. Here's how to estimate the reassessment before it surprises you.

Add in maintenance, grounds, and a vacancy allowance, and whatever's left is your NOI. On a well-run smaller building the expenses often eat something in the low-to-mid 40s as a percentage of income, though it varies. The point is to be honest, because every dollar you understate here becomes fifteen dollars of fantasy value at a 7 cap.

Step 3: Put the right cap rate on it

Divide the NOI by a cap rate to get the value, and pick that cap rate for your actual market, not a national headline. Strong metro submarkets trade tighter. Secondary and tertiary Florida markets, where a lot of smaller buildings live, price in the 7s and 8s, not the 5s you saw in a 2022 comp. A million-dollar NOI question: a building netting $90,000 is worth about $1.2 million at a 7.5 cap, but only about $1.0 million at a 9. The cap rate is the single biggest lever, so anchoring it to a real, current market number is most of the job.

One caution worth understanding: the cap rate that makes sense today is tied to what debt costs. With loans sitting around 6 percent, a buyer can't pay a 5-cap price and still make the deal work. That relationship is the heart of my post on cap rate vs cash-on-cash return, and it's why the honest cap rate is usually higher than sellers wish.

Step 4: A sanity check on price per unit

Once the income approach gives you a number, sanity-check it against price per door. Small buildings can price a little richer per unit, but if your income math produces a per-door number way out of line with what comparable buildings are actually selling for in your market, something in your inputs is probably too optimistic. I keep both numbers in view, the income value and the per-door check, and if they disagree loudly, I go back and find out why before I trust the number.

Step 5: Deliver a range, and know where you sit in it

A real valuation is a range, not a single figure. The cap rate is a judgment call, and reasonable people land a few tenths apart, which moves the number. Where your building lands in the range depends on how it shows, how clean your financials are, and how competitive the buyer pool is when you sell. I give owners a low, a high, and a most-likely middle, and I'm straight about what would push it up or down.

Should you act on the number?

Knowing your value is step one. Whether to sell, hold, or refinance is a separate question that depends on your debt, your timeline, and where your market sits in the cycle. If that's on your mind, I laid out the honest version in should you sell your Florida apartment building in 2026. Sometimes the right answer is sell, sometimes it's genuinely hold, and I tell owners both, because pushing you to sell a building you should keep is the fastest way to lose your trust.

Run yours through it

That's the method: real income, honest expenses to get NOI, a market cap rate, a per-door sanity check, and a range. My valuation model runs exactly these steps, the same income approach I'd use if you hired me to price your building, with current insurance and a reassessed tax figure already built in. Answer a few questions and you'll have an honest number in a few minutes, not a memory of what buildings sold for three years ago.

And if you want a person to walk the number with you, that's what the phone's for. I answer it myself.