Many owners of a 20-unit complex can tell you their rent roll to the dollar. Ask them what the building actually nets after every real expense and today’s debt, and the number gets fuzzy. That gap—between gross rent and what lands in your pocket—is where sale prices are won and lost, and in 2026 it’s wider than it’s been in years.
Here’s an honest, line-by-line look at a representative Central Valley 20-unit, built on current market figures. Once you see how the math is structured, you can plug in your own numbers and stop guessing.
Owners tend to value their property one of two ways: what the one down the street sold for, or what they paid plus what they’ve put in. Buyers don’t care about either. A 20-unit is valued off its income less any discovered deferred maintenance, using one formula:
Value = Net Operating Income ÷ Cap Rate
Net Operating Income (NOI) is what’s left after operating expenses but before your mortgage. The cap rate is what the market will pay for that income stream today. Right now, Class B/C multifamily in markets like ours is trading in roughly the 6.25%–6.75% range—up meaningfully from a few years ago, which means the same NOI is worth less than it used to be. When people say “prices softened,” this is the mechanism.
Illustrative Class B/C 20-unit, older Central Valley stock.
| Line | Annual |
|---|---|
| Gross potential rent (20 × $1,350 × 12) | $324,000 |
| Other income (laundry, pet, fees) | $9,000 |
| Gross Scheduled Income | $333,000 |
| Vacancy & credit loss (6%) | ($20,000) |
| Effective Gross Income | $313,000 |
Note the vacancy line. Owners love to run numbers at 100% occupancy. No one operates at 100%—between turns, non-payment, and concessions, 5–7% is the honest figure for older stock, and a buyer will underwrite it that way whether you do or not.
| Expense | Annual |
|---|---|
| Property taxes (reassessed at sale, ~1.2%) | $36,000 |
| Insurance | $18,000 |
| Property management (6% of EGI) | $18,800 |
| Repairs & maintenance | $22,000 |
| Utilities (owner-paid water/sewer/trash) | $28,000 |
| Turnover & make-ready | $5,000 |
| Capital reserves | $6,000 |
| Admin, legal, misc. | $5,000 |
| Total operating expenses | $138,800 |
That’s about 44% of effective income—right in the normal 40–45% band for older Central Valley multifamily. If your expense ratio looks a lot lower, you’re probably missing something a buyer’s lender won’t.
What’s left: NOI and Value
NOI = $313,000 − $138,800 = ~$174,000
Value = $174,000 ÷ 6.5% = ~$2.67 million (about $134,000/unit)
That’s the number a buyer starts from—not price per unit, not the comp down the street.
Now the part that decides whether it’s worth owning: the debt
Valuation is unlevered. Your actual return depends on financing, and this is where 2026 bites.
Purchase price: ~$2.67M | 35% down = $934,500 cash in
Loan: $1.73M at 6.5% interest over 30 years → $131,635/year in debt service
Cash flow before tax = $174,000 NOI − $131,635 debt = $42,365/year
Cash-on-cash return = $42,365 ÷ $934,500 = 4.53%
A 20-unit that feels like it should throw off serious cash nets about $42,362 a year in pre-tax cash flow at today’s rates—a 4.5% cash-on-cash return. And the debt-service coverage ratio (NOI ÷ debt) lands at 1.32, right at the edge of what most lenders require. At today’s rates, this deal hardly pencils at 35% down. That’s not pessimism—it’s exactly why buyers now demand higher cap rates (lower prices) than they did in 2023.
If you’re holding, understand that your real return lives in the spread between your NOI and your debt—and that operating discipline (occupancy, expense control, reserves) moves value more than hoping for the market to bail you out.
If you’re thinking about selling, understand that a buyer is running this exact math backward from your NOI. Every soft expense you’ve ignored and every below-market rent you’ve let ride is already priced into their offer. The owners who net the most at sale are the ones who tighten operations and take care of any deferred maintenance issues 12–18 months before they list, not 1 month before they call a broker.
These figures are illustrative and built on early-2026 Central Valley market data—not an appraisal or an offer. Every building has its own rents, expenses, and debt. If you want to see what your specific property nets today, and what it would trade for in this market, I’ll run the real numbers with you.
Dustin Ilic, CCIM
Multi-Family Investment Advisor
Visintainer Group
CA License 01772625
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