4 Plex

[Ken Youngkrantz]

Good morning: I have a situation I have never run into before and am not sure if I am having a brain freeze or am dumb.

The subject property is a fourplex. Three 2 bedroom 1 bath apartments and one 4 bedroom 2 bath house. This is a vacant REO property that is selling for $145,000. Not in to bad of condition. Needs paint and carpets cleaned. Not much more for this area.

I have somewhat similar REO vacant 4-plex's that have sold and active listings. Not great comps but close enough I can make them work. However, they all are vacant and have no rental rates available.

I have 4-plex's available (sold and active listings) that have rental rates available. However, they are all in the $300,000 to $400,000 price range.

I'm not stepping back and seeing something here. Just no sure what I'm not seeing.

Any suggestions or ideas would be appreciated.

Thanks
Ken

It is Saturday and I am sitting inside working onthis when I should be outside enjoying the beautiful day.

 

[Don Clark]

Good morning: I have a situation I have never run into before and am not sure if I am having a brain freeze or am dumb.

The subject property is a fourplex. Three 2 bedroom 1 bath apartments and one 4 bedroom 2 bath house. This is a vacant REO property that is selling for $145,000. Not in to bad of condition. Needs paint and carpets cleaned. Not much more for this area.

I have somewhat similar REO vacant 4-plex's that have sold and active listings. Not great comps but close enough I can make them work. However, they all are vacant and have no rental rates available.

I have 4-plex's available (sold and active listings) that have rental rates available. However, they are all in the $300,000 to $400,000 price range.

I'm not stepping back and seeing something here. Just no sure what I'm not seeing.

Any suggestions or ideas would be appreciated.

Thanks
Ken

It is Saturday and I am sitting inside working onthis when I should be outside enjoying the beautiful day.

What is the question?

If the question is what rentals to use, then there is a solution. This is a technique I wish I could take credit for but I must give credit where it is due. In a course I took with the AI in 1994 in the Residential Case Study 7 day long course they taught and maybe still teach how to do an income approach by proxy. Find a property similar to the subject that is rented. Then find a property that is similar to the subject that has sold. Then assign the rental of the renta property to the sold property by proxy. Then do what you ordinarily would to find a GMRM . That is, divide the sales price of the closed sale property by the monthly rental amount assigned to it by proxu, and you have a GRM. Do that for as many properties as you can find, then select the appropriate GMRM for the subject. You can find an appropriate rental amount for the subject the same way....by proxy. Be sure and document this in your work file and note what you have done in the appraisal report.

If that was your question

 

[Carnivore]

Don,

thanks, I learned something new today. Now, just to be sure, since you and I are getting a little grey. Are you sure your remembering this correctly?

 

[EVAUSA]

What is the question?

how to do an income approach by proxy

ooooh, I likey, thanks for sharing!

 

[EVAUSA]

Have you tried going back in time, expanding radius, using three-unit dwellings?

 

[Michigan CG]

Mr. Clark has given very good advice.

Let me elaborate further.

There are too many residential appraisers who are used to looking on the MLS website for information and who do not verify the sales or leases. Have you thought about knocking on doors of comparable properties and asking what they pay for rent.

I have 4-plex's available (sold and active listings) that have rental rates available. However, they are all in the $300,000 to $400,000 price range.

Where did you find this information? On the internet...MLS....?

You need information on a different kind of property in the $145,000 range. So go find them and drive to them, and talk to tenants and get the landlord info and talk to them. Sometimes due diligence requires a little extra work.

When I have a lease situation, I PERSONALLY visit every property (when applicable) to talk to the tenant and try to get the landlord contact.

On a different note, is it selling for $145,000 because it is a POS?

 

[Otis Key]

What is the question?

Thank you Don - I believe, however, that this goes to the current "approval" methods as encouraged by the TAF and the ASB. When we wrote the law for NM I pushed for higher requirements and the fact that the exam should be the equivalent to the SREA's 101 exam - 1 day - 8 hours.

They didn't want it then and now all I hear is complaints. Oh well, suffer.

 

[Ken Youngkrantz]

To answer a couple questions. I have gone back 12 months in the entire city of Bakersfield (approx 300,000 pop) Knocking on doors. No offense Tim, however I can tell you have spent many years in Iowa (I lived in a small town by Ottumwa for 27 years before moving to California in 2000). The only handgun I have is a 22 caliber. Seriously I would no more go in this neighhorhood and knock on doors than try to jump off Niagera Falls. In a different neighborhood yes I would definitely go knocking on doors. I do have several landlords names and numbers and will try to contact them and also talk to management companies on Monday.

 

[Jungle Boy]

4-plex for $145,000.
The price already tells me that I go there early in the day for the inspection, and then be ready to get the heck out of the neighborhood.

Oh no, I assumed. Appraisers should not assume.

 

[Brad Ellis]

Don,

Very good. That is the same approach i use.

Brad