A MultiFamily Question on Adjustments

[PropertyEconomics]

PE-your grm has inherent flaws in it whether you know it or not. Why not do a cap rate it's more accurate. Hey PE did you get an infraction from the moderator-I did.

Another quality post by Otis! Use your search engine to find out what is meant by an enhanced reprting format.

A cap rate is more accurate? Hmmm please explain that to me. And also please explain those inherent flaws with the GRM .. please Sandy ... enlighten me.

And no .. I didnt get an infraction from the moderator.

 

[Otis Key]

PE-your grm has inherent flaws in it whether you know it or not. Why not do a cap rate it's more accurate. Hey PE did you get an infraction from the moderator-I did.

Another quality post by Otis! Use your search engine to find out what is meant by an enhanced reprting format.

I was offering you the chance to explain enhanced reporting format in your own words. But if you can't seem to find them for yourself, then okay.

 

[SANDY]

PE-post your rental data and let's see how accurate your grm is! I really don't have the time to explain how and why a cap rate is better than a grm-you will have to research it on your own. clue-vacancy, expenses and collection loss.

 

[PropertyEconomics]

PE-post your rental data and let's see how accurate your grm is! I really don't have the time to explain how and why a cap rate is better than a grm-you will have to research it on your own. clue-vacancy, expenses and collection loss.

Imagine that Sandy .. not being able to support your statements. This really is becoming comical and you are so far out of your experience level its amazing.
I dont have to research it ... and frankly I cant post my rental data .. its confidential information at the request of both my client and the investor. So we are left for you to have the time to explain the allegations you have made. I will be waiting .......

 

[Mztk1]

Jim- You are probably right-as long as his sow accurately reflected what he did and since he now says that his sales data was limited it might be more in the realm of what an individual appraiser might choose to do or not do.
Yep, it is the 1025 form-my bad! Although the form doesn't provide space for adjustments to the rental data one still has to do it in the opinion of market rent section. Or maybe not if one has perfect rental comp matches. Still got that nasty grm problem though where one would need sales prices of comparables and with only 4 comparable sales it looks like soem potential for a large margin of error. Not to mention the inherent flaws in the grm itself. Maybe he did a cap rate.

Wouldn't that be like an enhanced report? Darn what a good idea that would be.

There may be only four sales to choose from, but there may be a plethora of rentals he has access to and market rent esimates may be solid. I prefer to think of the "flaws" in the GRM as "variables", which it is our job to control as best as possible to determine a reliable number. With good rental data, you can get the market rents for all your comps, control for different variables, and determine a highly reliable GRM. Get your subject market rent and boom. Because money is money whether in his town or two towns over, the application works well even if you have cruddy, distant sales when rental data is good.

But like I said, I'm not in his market. I have in the past had to rely on income for specific adjustment, but not often. Also, if I note in my income approach that the market reacts only to bedroom and bath count difference but not building/living area, that almost always carries over to the sales comparison approach. I try to keep the two approaches separate, and like it best when I can. But because at times, and on four family properties especially, the typical buyer is an investor whose main concern is income, the approaches do not work in a vacuum, and there is some interplay.

 

[Laughing Heir]

This post has gone on such a tangent I had to stop...it was too addictive!

As to the original post, applying the cost approach to the sales comparison would certainly make sense in cases such as this:
http://appraisersforum.com/showthread.php?t=131443

It seems that the general appraiser more comfortable with advanced techniques was able to parse out the value of a component that a lesser trained individual could not.

IMO, appraisers that have attained the General certification, especially ones that have earned the MAI designation, deserve a little more respect than what is being shown in this thread.

Just my $0.02

 

[TC]

Just stumbled into this thread. Pretty funny.


TC

 

[Michigan CG]

Just stumbled into this thread. Pretty funny.


TC

Or depressing, depending on how you look at it.

Hopefully educational for some.

 

[JSmith43]

I cannot imagine why you'd get an "infraction" from a moderator.

How about a cardio infarction?

 

[SANDY]

Just tried to use PE's method on a fourplex. Did not work very well because grm was difficult to reconcile. Also had plenty of rental comps but rents were difficult to chase down the actual reasons for variations. It's much quicker to do the income approach twice and throw away the cost as not credible for older properties.

Unit of comparison in sca worked mo better and served as check on income approach. Use more than one approach for more credible results!