Comparing a small local apartment building against listed REIT pricing before committing capital

Take a small 6 unit that comes up two blocks from a building an investor already owns. Asking 720,000, in-place NOI 41,000, so 5.7 percent before any capital goes in. It needs roofs on both structures and the boilers are original, call it 60,000 of near-term capex, a figure the seller and buyer often disagree about. A useful discipline at that moment is running the numbers on comparable listed names, residential and manufactured housing REITs, side by side. If implied cap rates on those portfolios come in around 6.4 percent, on assets in better physical shape with no roofs to argue about, that's a real alternative use of the same capital, not just a benchmark. A plausible outcome, deploying that 60,000 into the listed names instead: over roughly eleven months, dividends around 2,200 and share prices up around 9 percent combined, a result that compares well against fighting over roof replacement timing and boiler age on the local building. What tends to almost flip the decision is a seller coming down in price. If that 720,000 drops 40,000 to 680,000, the going-in yield moves to 6.0, which looks attractive until the capex is subtracted back out. A 6.0 that becomes a 5.2 after roofs isn't a 6.0. The habit worth keeping: run the implied cap on a listed portfolio every time a local deal crosses the desk. It costs twenty minutes and turns is this a good price into compared to what.