If you have ever bought or sold a house, you have likely heard the term “comp”. A “comp” is a comparable property. These would typically be a similar home in the neighborhood, with a similar year it was built, similar square footage, and similar upgrades.
A “Comp” for an apartment complex has similar criteria, but it is much more in depth. We use this criteria to get as much as a comparison as possible.
Number of Units
Year of Construction
An apartment complex can vary in the number of units AND the unit mix. Most apartment complexes have units with different floor plans, square footage, and bedrooms. In all cases, we use data from 3 or more apartment comps to get our numbers and estimates. Some apartment complexes have studio units, 1 bedroom, 2 bedroom, etc. Others have multiple 2 bedroom floorplans or townhouse options. We try to make as accurate a comparison as possible.
Each apartment complex will have their own set of amenities: pool, dog park, granite countertops, fitness center, etc. We want to match up the amenities as closely as possible. In many cases, it is in our business plan to add amenities. Checking out the comps lets us see what that market is asking for and we can plan accordingly.
When matching up the subject property to comparable properties, we look for properties within a 1-3 mile radius. Even if the property is in a 1 mile range, there are cases where an interstate runs through the 1 mile radius. We do not like looking on the other side of an interstate as that can be a completely different sub-market.
Year of construction is also a factor we look at when looking at comparable properties. We prefer to look at comps that were built within about 10 years of the subject property, if possible.
Using all of our criteria, we try to find as many like-properties as possible to get as close to a comparison as we can. No 2 properties are the exact same but we are able to get a good idea of what the market rent is, where we can add value to the property, or what amenities we can bring.