Price Per Unit
Also called: Per door, Price per door, PPU
Price per unit is a property's total purchase price divided by its number of units, and it is the standard shorthand for comparing multifamily pricing across deals in a market.
Price per unit is the quickest comparability check in multifamily and the first number most brokers and buyers quote to each other. It has the advantage of being independent of the income statement, so it cannot be manipulated by how a seller presents expenses.
Its weakness is that it says nothing about unit size, condition, or income. A $150,000 per unit price on 1,100 square foot units in good condition and the same price on 600 square foot units needing full renovation are entirely different trades. Price per square foot and replacement cost are the natural companion metrics.
How to calculate price per unit
Price Per Unit = Purchase Price / Number of UnitsRules of thumb
- Always pair price per unit with price per square foot. The two together catch unit-size distortions that either alone will miss.
- Compare to local replacement cost. Buying meaningfully below the cost to build is a durable form of downside protection.
Calculate price per unit
Related terms
- Capitalization Rate (Cap Rate)
A capitalization rate is a property's net operating income divided by its purchase price, expressed as a percentage, and it represents the unlevered annual yield the property produces at that price.
- Rent Comparables
Rent comparables are recently leased units at competing properties used to establish the market rent a subject property can achieve, adjusted for differences in size, condition, amenities, and location.