How to Wholesale Multifamily Properties: Duplex to 20-Unit Guide
Multifamily wholesaling combines the accessibility of residential wholesaling with the larger assignment fees of commercial deals. A duplex, triplex, or small apartment building (5-20 units) can generate $10K-$50K assignment fees because the buyer pool is sophisticated and the deal sizes are larger.
Small multifamily vs large multifamily
| Factor | 2-4 Units (Residential) | 5-20 Units (Commercial) |
|---|---|---|
| Financing | Conventional/FHA loans | Commercial loans only |
| Valuation | Comparable sales + income | Income approach (cap rate) |
| Buyer type | Investor or owner-occupant | Professional investor |
| Typical assignment fee | $5K-$15K | $10K-$50K |
| Due diligence | Standard inspection | Rent roll audit, expense verification |
How to value multifamily properties
For 2-4 unit properties, you can use a hybrid approach: comparable sales of similar multifamily properties AND the income approach. For 5+ unit properties, the income approach dominates.
Value = NOI / Cap Rate
NOI = Gross Rental Income - Vacancy - Operating Expenses
Example: A fourplex rents for $4,000/month total ($48K/year). With 8% vacancy ($3,840) and $18,000 in annual operating expenses, the NOI is $26,160. At a 7% cap rate, the property is worth $373,714.
When analyzing multifamily for your buyers, present both the current NOI (based on actual rents) and the pro forma NOI (based on market rents after stabilization). The gap between these two numbers represents the value-add opportunity that attracts buyers.
Finding multifamily motivated sellers
Multifamily sellers are motivated by:
- Tired landlords: Managing tenants is exhausting. Owners of older multifamily buildings with deferred maintenance and problem tenants are prime candidates.
- Vacancy issues: A 10-unit building with 4 vacancies is losing $3K-$4K/month. That pain accumulates fast.
- Code violations: Multifamily properties face stricter code enforcement than single-family homes. Violations stack up and become overwhelming.
- Estate/probate: Inherited apartment buildings are common. Heirs rarely want to become landlords.
- Partnership dissolution: When co-owners disagree, selling at a discount beats years of legal battles.
Data sources for finding multifamily leads include tax records (filter for multifamily property types), absentee owner lists filtered by property type, and code violation databases.
Analyzing a multifamily wholesale deal
When evaluating a multifamily deal for wholesale, you need to verify:
- Actual rent roll: Get copies of all leases. Verify that stated rents match actual collections.
- Operating expenses: Taxes, insurance, utilities (if owner-paid), maintenance, management, and reserves. Request 2-3 years of expense history.
- Market rents: Are current rents below market? The gap between actual and market rent is the value-add play. Use rental income projections to verify.
- Physical condition: Major systems (roof, HVAC, plumbing, electrical) in a multifamily building can cost $50K-$200K+ to replace. Get repair estimates for big-ticket items.
- Occupancy history: A building that is always 70% occupied has a structural problem. A building that is usually 95% occupied but currently at 80% has a fixable problem.
Building a multifamily buyer list
Multifamily buyers differ from single-family fix-and-flip buyers:
- Portfolio landlords: Already own multiple units, looking to add more. These are your best buyers for 2-10 unit deals.
- Syndicators: Raise capital from passive investors to buy apartments. Usually interested in 10+ units.
- BRRRR investors: Buy, rehab, rent, refinance, repeat. BRRRR analysis is especially powerful for multifamily because the income supports higher refinance values.
- 1031 exchange buyers: Investors who just sold a property and need to place capital within 180 days. They are motivated and move fast.
Use cash buyer identification to find investors who have recently purchased multifamily properties in your target area. These verified buyers are actively acquiring and have the capital to close.
Marketing multifamily deals
Your deal marketing for multifamily should include: property overview with unit mix, current and pro forma rent roll, trailing 12-month operating statement, cap rate analysis (current and pro forma), photos of each unit type, major capital expenditure needs, and a clear investment thesis.
Multifamily buyers are numbers-driven. Lead with the financial analysis, not the photos. Show them the return potential and they will look past cosmetic issues.
Related guides
- Cap Rate Explained
- How to Analyze a Rental Property
- Rental Cash Flow Analysis
- Find Cash Buyers Near Me
- Building Your Buyer List