The “$10 Rent = $200K Rule”

The “$10 Rent = $200K Rule”

The “$10 Rent = $200K Rule”

(Quick multifamily value estimator)

This rule comes from the same core formula:

Property Value = NOI ÷ Cap Rate

But we simplify it so the math can be done in your head while touring a property.

Step 1

Convert Rent Increase to NOI

Every rent increase produces income.

Formula:

Rent Increase × Units × 12

Example:

$10 rent increase
20 units

10 × 20 × 12

= $2,400 NOI increase

Step 2

Convert NOI to Property Value

Divide by cap rate.

Example cap rate:

6%

2,400 ÷ 0.06

= $40,000 value increase

Shortcut Result

For a 20 unit property

$10 rent increase ≈ $40K value increase

Scale the Rule

This is where the “$10 = $200K rule” comes from.

Example:

100 units

$10 rent increase

10 × 100 × 12

= $12,000 NOI

12,000 ÷ 0.06

= $200,000 value increase

So:

$10 rent increase on 100 units ≈ $200K value increase

Zia Training Table

At a 6% cap rate

Rent Increase20 Units50 Units100 Units
$10$40K$100K$200K
$50$200K$500K$1M
$100$400K$1M$2M

Real Example

Property

48 units

Current rent

$900

Market rent

$1,400

Rent gap

$500

NOI Increase

500 × 48 × 12

= $288,000

Value Created

288,000 ÷ 0.06

= $4,800,000 value increase

That Is Why Investors Walk Properties

They are not looking at the building.

They are thinking:

“What is the rent gap?”

Because that tells them the future value.

The Three Mental Rules Zia Should Remember

Rule 1

$1 rent increase ≈ $200 value per unit

Rule 2

$100 rent increase ≈ $20K value per unit

Rule 3

Rent Gap × Units × 12 ÷ Cap Rate
= Equity Created

Why Grant Says These Deals Are Everywhere

Because many properties have:

• long-term tenants
• owners who never raise rents
• outdated units
• mom-and-pop management

Which creates large rent gaps.

The Real Investor Question

Instead of asking:

“Is this property nice?”

Investors ask:

“How far below market rent is this property?”

Because that determines the equity potential.

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