4 unit multi family

[Zoe]

The main reason we perform rental surveys is because we don't assume the reported contract rents are equal to the market rents. Same with income/expense forecasts, GIM/GRM factors and so forth. Sometimes these property are being well managed and sometimes they aren't. Sometimes the property owners are telling us the truth and sometimes they aren't.

I don't get mad at a property owner or a broker who is trying to zoom me. It's just people trying to do as best they can for themselves. It's just business. But I have to hold the line because that's what I sell - my honesty and objectivity and credibility.

Yeah. I just want facts the owner has and I can go from there.. I assume the IRS has whatever facts the owner/client gives me are what IRS has.

The income/expense are like balancing acts with rent roll.

If they don't rhyme...........red flag.

Any smart lender is going to want both income/expense and rent roll.

 

[Terrel L. Shields]

Please no insults

Your mother dresses you funny... oh..you said NO insults. Sorry...

I am appraising a 4-unit property. I could find only 2 similar comparable sales and intend to include a 3 unit comparable.

I would do the cost approach as a sort of benchmark of value.
I would do an income approach - probably a full income approach with estimated market rents, less vacancy and loss allowance. I'd itemize expenses - utilities, insurance, any outside labor (mowing), a repair allowance, and recapture (inverse of the remaining life. So, if you think remaining life is 40 years, then recapture is 2.5% annually. 30 years would be 3.33%. Get a cap rate from the comps using a unity of application.
The sales approach? I've value it by comparing the comps by the SF, by the bedroom, and by the unit and see how it falls. I find bedroom count is often the most commonly used.

Buyers of fourplexes are usually landlord types or, occasionally, intend to occupy one unit and rent out the other 3 to defray the mortgage expenses.