Commercial Sales · the broker's view
Sell an Apartment Building Based on Verified Operating Income
The number of units attracts attention. The quality of the rent roll and the expenses decides whether an investor stays interested. Build the sale plan around what can be verified: occupancy, each tenant's lease terms, insurance, taxes, maintenance and the improvements the building still needs. The asking price follows from that work, not the other way around.
Review My Multifamily Sale Strategy
The Short Answer
An apartment building is priced from net operating income: rent actually collected, plus other income, less the cost of operating the property. A buyer rebuilds that figure from the rent roll and the statements, then replaces the seller's taxes and insurance with what a new owner expects to pay. BreakThru Realty assigns a licensed commercial agent to the sale, and Tyson E. Sam is the broker of record accountable for it.
Scheduled Rent Is Not Collected Rent
A twelve-unit building with every unit leased at the same rent has an obvious top line. Multiply and you have gross scheduled rent. An investor treats that figure as the most the building could bring in, and starts subtracting.
Some units sit empty between tenants. Some rent is billed and never paid. A unit may be occupied by a manager, or leased at a discount that ends next month. On the expense side, a seller who self-manages shows no management cost, and one who has put off repairs shows low maintenance. A buyer puts those costs back in.
So two statements exist for every building: what happened under the current owner, and what the buyer believes will happen under the next. Keep them apart. An owner who mixes actual results with hoped-for rents hands the buyer a reason to distrust both.
A Twelve-Unit NOI Bridge
Enter a year of scheduled rent, the losses and the operating expenses. It opens on a hypothetical twelve-unit building with each unit leased at $2,000 a month.
| Line | Arithmetic | Per year |
|---|---|---|
| Gross scheduled rent | 12 units × $2,000 × 12 months | $288,000 |
| Vacancy | 5% of $288,000 | −$14,400 |
| Collection loss | 1% of $288,000 | −$2,880 |
| Other income | Laundry and parking | $6,000 |
| Effective gross income | $288,000 − $14,400 − $2,880 + $6,000 | $276,720 |
| Operating expenses | Taxes, insurance, repairs, management, utilities | −$118,000 |
| Net operating income | $276,720 − $118,000 | $158,720 |
Formula. Net operating income = gross scheduled rent − vacancy − collection loss + other income − operating expenses. Vacancy and collection loss are each a percentage of scheduled rent. Loan payments, income tax and depreciation are not operating expenses.
Hypothetical inputs chosen to keep the arithmetic easy to follow. They do not describe rents, vacancy or expenses in any Florida market, and the result is not a valuation. The calculator on this page runs in your browser with the figures you enter and sends nothing anywhere.
Actual Against Projected: The Lines a Buyer Rewrites
The same hypothetical building. The left column is the seller's last twelve months. The right is one buyer's estimate for its own first year.
| Line | Seller's actual | Buyer's projection | Why it changes |
|---|---|---|---|
| Property tax | $28,000 | $43,000 | The buyer estimates the bill after the county reassesses the property following the sale |
| Insurance | $34,000 | $39,000 | The buyer uses a quote for its own policy, not the seller's renewal |
| All other operating expenses | $56,000 | $56,000 | Left unchanged in this example |
| Total operating expenses | $118,000 | $138,000 | Two lines moved, by $20,000 together |
| Net operating income | $158,720 | $138,720 | Same rents and same building, at a different owner's costs |
Hypothetical figures. No tax rate, assessment rule or insurance cost is implied. The county property appraiser explains how a sale affects an assessment, and a tax professional and an insurance agent estimate the bills for a specific building.
What Makes a Rent Roll Believable
The rent roll itself
- Every unit listed, with its bedrooms, the lease start and end, and the rent charged
- Deposits held for each tenant, matching the account they sit in
- Concessions, discounts and any unit occupied by staff or family
- Month-to-month tenancies marked as such
Proof behind it
- Signed leases for every occupied unit
- A collections report for the last twelve months: rent billed against rent received
- Bank statements that agree with the collections report
- The units that turned over during the year and how long each sat empty
The expense side
- Operating statements for the last two or three years, with loan payments and the owner's personal expenses left out
- The latest tax bill and the insurance declarations page
- Utility bills, and which utilities tenants pay directly
- Repairs separated from capital improvements, with invoices
The building
- Ages and records for the roof, plumbing, electrical and air conditioning
- Work a buyer should expect to do, with estimates where the owner has them
- Any inspection or recertification the local building department requires: ask the department what applies
- Whether the zoning allows more than is built, which a land-use professional confirms
Questions Worth Asking First
- How is a multifamily building priced?
- Mainly from its net operating income and the return a buyer requires for the risk, cross-checked against what similar buildings sold for per unit and per square foot. The income a buyer uses is not the figure on the seller's statement. It is rebuilt: rent collected, a vacancy allowance, other income, and expenses adjusted to what the next owner expects to pay, including management if the seller ran the building personally. Below-market rents, deferred repairs and the unit mix move the figure in either direction. A broker's pricing opinion sets out that reasoning with the comparable sales. It is not an appraisal.
- What is a rent roll?
- A dated list of every unit in the building showing who rents it, the lease start and end, the monthly rent, the deposit held and any balance owed. It is the first document an investor and a lender ask for, because it is the source of the income figure. A useful rent roll also marks vacant units, month-to-month tenants, concessions and units not rented at arm's length. On its own it shows what is charged. Paired with a collections report and bank statements it shows what is received, which is the number a buyer relies on.
- Which expenses matter most after a Florida property sale?
- The ones that change with the owner. Property tax is the first: a sale generally leads the county to reassess the property, so a buyer underwrites the tax bill it expects, not the one the seller has been paying. The county property appraiser and a tax professional can explain how that works for a particular building. Insurance is the second, because a new owner buys a new policy at its own quote. Management is the third when the seller has been doing the work unpaid. Repairs and reserves follow. A seller who shows these adjustments up front avoids arguing about them later.
Who Does What
- A licensed BreakThru Realty commercial agent does the day-to-day work and is your main point of contact.
- Tyson is the broker of record: the licensed Florida broker accountable for the brokerage and every agent under it. He reviews the offers, contracts and closing statements that move through the company.
- Which agent works with you, and how the brokerage will represent you, is set out in writing before any work begins.
| Broker of record | Tyson E. Sam, Founder and Broker of Record, BreakThru Realty |
|---|---|
| Florida real estate license | 3565210 |
| Also listed as | Tyson Sam, the spelling in MLS records and on the listing sites they feed |
| Brokerage | BreakThru Realty LLC, a licensed Florida real estate brokerage |
Brokerage compensation is negotiable and is agreed in writing before any work is marketed. No fee or rate on this page is a standard one.
BreakThru Realty is a real estate brokerage. It does not give legal, tax, lending, engineering or appraisal advice: an attorney, a CPA, a lender, an inspector or an appraiser answers those questions, and a broker's opinion of value is not an appraisal.
This Page Explains the Thinking. The Service Page Does the Work.
What the brokerage does for you, step by step, and how to start is on its own page: Sell an apartment building.
Every figure on this page is an illustration: arithmetic on assumed inputs, shown so the reasoning can be followed. None is market data, a comparable sale, an appraisal, a forecast or the result of a BreakThru Realty transaction.
Review Your Commercial Property Options
Tell us what you own and whether you are weighing a sale, a lease or both. A licensed BreakThru Realty commercial agent replies within one business day to go through the income, the leases and the questions a buyer or tenant will ask. No documents are needed to start.
The form asks for: I want to; Property type; City or county; Approximate building size or acreage (optional); Occupancy; Asking range, if you have one; then your name, an email address or a phone number, and your consent to be contacted about the request. It asks for no documents.
Your request is with BreakThru Realty. A licensed commercial agent replies within one business day to talk through the property, its income and your options. Nothing is marketed or signed unless you decide to go ahead.
Prefer to talk? (786) 914-1017 · sales@breakthrurealty.com
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- Commercial Sales: the division page: Buyers price the income they will inherit. Test the story the numbers tell before the property goes to market.
- Office Building Sales: Buyers price the calendar of lease expirations and the capital work ahead. Build both schedules before diligence begins.
- Retail Property Sales: A retail buyer reads the center one lease at a time. Show what supports the income and what is still open.
- Warehouse & Industrial Sales: A warehouse sells to the buyer whose operation fits it. Verify the specifications that buyer will test before you set a price.
- Hotel & Motel Sales: A hotel buyer prices a building and a business together. Prepare the operating record and the property record side by side.
- Land & Development Sites: Acreage is a measurement. Buildable yield is what a buyer pays for. Work out what can be confirmed before the site is priced.
- Mixed-Use Property Sales: Storefronts, offices and apartments carry different risks. Separate the income by use before a buyer does it for you.
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