Price per unit is the total price divided by the number of dwelling units. It is the comparison language of small and mid-size multifamily, because it normalises buildings of different sizes into one number a buyer can carry in his head and test against what has traded nearby.
Price per unit=PriceNumber of units
- Price
- The price being tested, asking or closed.
- Number of units
- Legal dwelling units, as permitted and as reflected in the certificate of occupancy, not the count of doors on site.
- Legal units, not doors. An unpermitted conversion adds a door, adds risk, and adds nothing a lender or an appraiser will count.
- It ignores unit size, mix and condition, so it compares buildings only when those three are close to equal.
- It is the fastest sanity check on a comp set, and the fastest way to see that a seller is pricing an intention.
- Land deals price per buildable unit, not per existing unit. The same words mean different things on either side of a redevelopment.
The same eight units, at the asking price and at the value the income supports.
Both numbers are true. One describes what is being asked, the other what the building earns, and only one of them is negotiable.
Related terms
All termsGRM (Gross Rent Multiplier)
The gross rent multiplier is the price divided by the property's annual gross rent.
InvestmentCap Rate (Capitalization Rate)
The capitalization rate is a building's net operating income divided by its price, expressed as a percentage.
DevelopmentLand Residual Value
Land residual value is what a developer can rationally pay for a site: the value of the finished project, minus every cost to build it, minus the profit the risk demands.
Terms arrive with the writing.
The glossary grows as the Journal does, one email when something worth reading goes up. No noise.
Unsubscribe anytime. See our Privacy Policy.