The $2 Million Multifamily Mistake

How a wholesale apartment deal can look worth $7.7M on paper but be much lower in real underwriting

Here is the bigger mistake I wanted to show you on this Atlanta deal.

It is not just the assignment fee.

The bigger mistake is this:

Wholesalers and newer buyers often anchor to a high appraisal or a high price-per-unit number without proving the property can actually support that value with real income.

That mistake can make a property look worth about $2 million more than it really is.

The deal you received

Address:
4550 Washington Rd, Atlanta, GA 30349

What the text blast said:
40-unit multifamily
12,096 square feet
Wholesale price: $6,999,990
Appraised for: $7,700,000

But public listing data for this same property says something different. LoopNet shows 40 units, 39 townhomes and 1 office, with a building size of about 48,000 SF, and a separate page for the same address shows a 2-bed unit around 1,350 SF. Another page for a 3-bed unit at the same address shows about 1,400 SF.

So right away, the blast has a data problem.

Mistake number 1: using bad square footage

The text message said:

12,096 SF total for 40 units

Third-grade math:

12,096 ÷ 40 = 302.4 SF per unit

That does not make sense for 1-bedroom, 2-bedroom, and 3-bedroom units.

Now compare that to the public unit examples:

1,350 SF for a 2-bedroom unit
1,400 SF for a 3-bedroom unit

That tells us the 12,096 SF number is almost certainly the wrong measurement for underwriting the whole asset. LoopNet’s 48,000 SF total building size is much more consistent with a 40-unit townhouse-style project.

So the first lesson is simple:

If the square footage is wrong, the value story can be wrong.

Mistake number 2: trusting the appraisal more than the income

This is the one that hurts buyers.

A wholesaler says:

“Appraised for $7.7M.”

That sounds good.

But multifamily value is usually driven by income, not hype.

So the real question is:

What NOI would this property need to justify $7.7M?

Let’s do easy math.

Step 1: what NOI supports $7.7M?

Value = NOI ÷ cap rate

So:

At a 6% cap rate:

$7,700,000 × 0.06 = $462,000 NOI needed

At a 7% cap rate:

$7,700,000 × 0.07 = $539,000 NOI needed

That means this property needs roughly:

$462K to $539K in NOI
to really support that appraisal range, depending on the cap rate.

Step 2: build a simple public-rent estimate

Public sources for this address show:

37 two-bedroom units
2 three-bedroom units
and 1 office space on one LoopNet listing page.

A public rental page for the same property showed one available 2-bedroom at $1,450/month, and a page for a 3-bedroom unit at the same address showed an estimated rent of $1,696/month. These are only public indicator rents, not a rent roll, so this is just a rough stress test.

Now the math:

37 × $1,450 × 12 = $643,800

2 × $1,696 × 12 = $40,704

Total scheduled rent:

$643,800 + $40,704 = $684,504

Step 3: take out vacancy

Let’s use a simple 5% vacancy.

$684,504 × 95% = $650,278.80

Call it:

$650,279 effective income

Step 4: take out expenses

Let’s use a simple 45% expense load for an older 1970 multifamily asset.

$650,279 × 55% = $357,653 NOI

Call it:

about $358,000 NOI

Step 5: convert that NOI into value

At a 6% cap:

$357,653 ÷ 0.06 = $5,960,889

At a 7% cap:

$357,653 ÷ 0.07 = $5,109,333

So with this rough public-rent stress test, the value looks more like:

$5.1M to $6.0M

Not $7.7M.

The gap

Now compare that to the claimed appraisal.

Claimed appraisal:
$7,700,000

Stress-tested value at 6 cap:
$5,960,889

Difference:

$7,700,000 − $5,960,889 = $1,739,111

At a 7 cap, the gap is even bigger:

$7,700,000 − $5,109,333 = $2,590,667

That is why I said a mistake like this can make a property look worth about $2 million more than it really is.

What is probably happening

Usually it is one of these:

1. They are quoting an old appraisal
Maybe done when rents, occupancy, or market sentiment looked better.

2. They are using pro forma fantasy
Meaning “this is what it could be worth if everything goes perfectly.”

3. They are mixing up gross value with real stabilized value
That is common when wholesalers do not have the rent roll or T12.

4. They are selling the story, not the NOI
That is the most common one.

What you should say about this deal

Here is the clean takeaway:

The blast price is $6,999,990, but based on rough public rent indicators and basic underwriting, this deal may underwrite closer to the low-$5M to high-$5M range, unless the actual rent roll and T12 prove much stronger income than the public data suggests. The square footage inconsistency is also a major warning sign because the text says 12,096 SF, while public listing data shows about 48,000 SF for the same 40-unit asset.

Message back you can send

“Appreciate you sending this over. I took a look and need the rent roll, T12, current occupancy, and the actual appraisal before I can underwrite it. The square footage in the blast also looks off versus public listing data, so I want to confirm the real rentable/building SF. Based on a quick income stress test, I need to see stronger NOI support before I can get near that price.”

Bottom line

The mistake is simple:

Do not buy the appraisal. Buy the income.

If the NOI does not support the number, the value is not real.

And on this one, the public data says you need proof before trusting the $7.7M story.