What Is Per-Unit Analysis?
Per-unit analysis divides NOI, rent, operating expenses, and purchase price by the number of units. It lets you compare a 4-unit two-to-four-units building to a 12-unit apartment building on a normalized basis. Key metrics include cost per unit, cost per door, rent per unit, and NOI per unit. Unit mix affects these numbers—a building with more two-bedrooms may show higher rent per unit but different turnover and expense profiles.
Per-unit analysis breaks down a multifamily property’s income, expenses, and value on a per-unit basis—enabling comparison across different-sized buildings and unit mix configurations.
At a Glance
- What it is: Income, expenses, and value expressed per unit for comparison across properties
- Why it matters: Enables apples-to-apples comparison of different-sized buildings and unit mix
- Key detail: Cost per unit, rent per unit, NOI per unit are standard per-unit metrics
- Related: Cost per unit, cost per door, NOI, cap rate, unit mix
- Watch for: Per-unit metrics can mask unit mix and submarket differences
How It Works
Core metrics. Divide total gross rental income by unit count for rent per unit. Divide NOI by unit count for NOI per unit. Divide purchase price by unit count for cost per unit or cost per door. These normalized figures let you compare a 4-unit at $120,000/unit to a 24-unit at $95,000/unit—even though total price and scale differ.
Unit mix impact. A 12-unit with 8 one-bedrooms and 4 two-bedrooms will show different rent per unit than a 12-unit with 12 studios. Unit mix drives income, turnover, and expense structure. Per-unit analysis is a starting point; dig into unit mix and submarket comps for a full picture.
Cap rate and value. Cap rate is NOI ÷ value—it’s already a rate, not per-unit. But NOI per unit helps you model value-add: if you can add $200/unit/year in NOI through rent increases or expense reduction, that flows directly to value at the prevailing cap rate.
Real-World Example
Deal comparison, Phoenix submarket. Investor compared two off-market deals: a 6-unit at $720,000 ($120,000/unit) and a 14-unit at $1,260,000 ($90,000/unit). The 6-unit had NOI of $42,000 ($7,000/unit); the 14-unit had $73,500 ($5,250/unit). Per-unit NOI was higher on the 6-unit, but the 14-unit had a 5.8% cap rate vs 5.8% on the 6-unit. The 14-unit had more unit mix diversity (studios through 2BR) and lower cost per door. She chose the 14-unit for scale and cost per unit efficiency, planning to add value through value-add multifamily improvements.
Pros & Cons
- Normalizes comparison across different-sized buildings
- Highlights efficiency (cost per unit, NOI per unit)
- Supports value-add modeling (incremental NOI per unit)
- Standard language for brokers and investors
- Can mask unit mix and submarket differences
- Doesn’t capture common area or amenity cost differences
- Smaller buildings may show higher per-unit costs due to fixed expenses
Watch Out
- Mix blindness: Two properties with the same cost per unit can have very different unit mix and risk profiles.
- Expense allocation: Verify how operating expenses are allocated—shared vs separate utilities, common areas—before trusting per-unit expense figures.
- Apples to oranges: Compare within similar submarkets and unit mix bands when possible.
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The Takeaway
Per-unit analysis is the standard way to compare multifamily properties of different sizes. Use cost per unit, cost per door, rent per unit, and NOI per unit—but always layer in unit mix and submarket context for full underwriting.