Appraise as SFR or MF?

[Sadie]

GRM: Whoever trained you left you directionless in thinking you need rental houses to sell to get a credible GRM. THAT is just another of the industry lies to excuse not performing an income approach regarding residential properties. Allow me. Perform a rent survey, as we should be doing anyway, using rental properties/data with physical structures similar to the subject property and located in the subject's general market area. Use the data to establish an estimate, known as your opinion, of market rent(s) for said otherwise competitive properties. Next, use those results to estimate the market rents for competitive properties THAT HAVE SOLD regardless of if they are, or were, rented or not. Voila! You now have a credible market established monthly rental amount for a property with a recent sale price, now you have a valid GRM estimate for that sale.

RENT CONTROL: If the area is 100% rent controlled, and the subject would be also if rented, then it is a like for like comparison. What's your problem? If the area is partially rent controlled, but much of the area is not, IF your subject would NOT be rent controlled, one simply does NOT use rent controlled properties in the analysis. What's your problem?

GSE/SOW: Secondary market preprinted scope of work from their URAR form, calling a comparison approach primary or not, does NOT relieve you from the USPAP requirement the appraiser perform all approaches necessary for credible results. The USPAP requires appraisers explain and support the exclusion of any approach within the appraisal report. USPAP does not require the exclusion of any approaches believed not applicable. It is the appraiser’s job to include the reporting required.

So, if in the face of hundreds, if not thousands, of SFR type structures rented all around your market place, you ever end up in front of the state board in Salem trying to explain how regardless the Income Approach clearly would have produced credible results, BUT you deemed the approach not necessary because some GSE form said the comparison approach was "primary" .... let me know when the hearing is going to be... I'll bring popcorn. It would be far better if, after the last several decades of lies, tricks, stupid boiler plate usage, and everyone looking the other way, if the ASB would just change the USPAP to say for SFR properties the only required approach is the Sales Comparison Approach, the other two are optional. Change USPAP, end the lies.

What appraisal planet are you on?

In an appraisal, an appraiser arrives at a Gross Rent Multiplier (GRM) by dividing the recent sales prices of comparable rental properties by their gross rental income.

Rent controls vary by area, but typically when a unit is newly rented, then market rent applies. I am surprised you don't know that in a rent controlled area, the longer a unit is occupied by the same tenant, the rent paid gets farther and farther from market rent.

And I do believe you need a lesson in reading comprehension, I just said on a GSE form the primary approach to value is SCA, not the exclusion of the other approaches.

 

[Zoe]

what about homes built or modified for single room rentals? Or, like a few I have done over the years, a foster family built a house designed for numerous children. One was a 3 story with boys on the top floor with male counselors, girls on the middle floor with female counselors, and the lower floor was the manager, kitchen and dining rooms. Another had 6 rooms and was managed by a couple. They had a commercial kitchen and a large dining room, built the house specifically for this purpose. Another actually had cafe booths for dining, a separate library for home-schooling, and housed about 6 foster kids at a time.

They are getting subsidy money from somewhere. That is like a halfway house when somebody gets out of prison and has to stay there on a temporary basis that is court ordered. I wouldn't swear a relative is not footing the bill but zoning would have no problem with that. I am sure there are some brothels where all you rent is a room. I guess you might sign 6 month lease if you wanted the same room every time.

Code could very possibly have a problem with a brothel. LOL