Appraising a triplex - no comps?

[J Grant]

I'm having a dilemma here. I've got a triplex I'm working on and expected to have at least a couple of comps but have none. None within 50 miles in the last 5 years. Mind boggling, really. Same for fourplex sales. Nada. I have a lot of duplex sales. I need some help with the sales approach.

I could value per unit based on adjusted prices. But being a triplex, it's 30% larger. If I adjust for differences in room count or GBA, I feel like it inflates the per unit cost.

I'm tempted to back out of the assignment even though it's almost done. But that also wouldn't help me if I face this issue again.

Help, please!

If I adjust for extra unit, I would not also adjust for size, its double adjustment. Seems more market oriented to adjust for the additional unit for the income it would bring rather mechanically for living area . Explain what you did and why.

Imo, if you have enough duplex sales and rental income from units, I think the assignment could be credibly completed. If you are going back in time, why stop at 5 years? Run a search back 8 years, see what comes up. You may not grid an 8 year old triplex of fourplex sale, but it might show % of sale price difference (or you can grid it as an additional comp. )

 

[Michigan CG]

$185,000.

Sales per unit is coming up $75,000. That's why I think adjusting the square footage and room count for the additional unit is inflating the price per unit.

Adjusting for room count AND SF.....hhhhmmm...double adjustment?

A three or four unit property under one rood is going to have lower cost per per unit but will also demand lesser rent most of the time.

A three or four unit is most of the time going to sell for less per unit, but you have no sales to show that. Could you take your GRM range and go with the lower end of the range?

 

[residentialguy]

Just because you adjust bed bath and sf, doesn't mean you're DDipping. Those rooms typically have a premium on them over and above sf of GLA.


I have a feeling you're not going to get paid nearly enough for this assignment. I would strongly suggest you quadruple your fee

 

[CANative]

What is the name of the city or town?

 

[J Grant]

Adjustment for bedroom/bath count is baked into adjusting for the third unit.

If you adjust for third unit, (which to me is more market oriented), either don't adjust Sf or adjust a small/marginal amount, such as $10 per sf for contributory value of a larger property aside from the income it produces (but the main value is the income it produces for being large enough to provide a third rentable unit)

Valuing small income property we put a different hat from the point of typically motivated buyer. It's either all about income stream/cash flow, or about living in one unit and renting the others (option 2 is less popular at least in my area). Hoping for appreciation is a secondary motivation for buying these properties ( in many cases, there are always exceptions of course)

.

 

[Joe Flacco]

Are there any comparables with 5 or 6 units?

 

[Joe Flacco]

I would probably lean on income approach as well.

 

[Terrel L. Shields]

What is the name of the city or town?

It is in his name. Pittsburg, KS...I'm betting and the population of Pittsburg, KS was the same in 1950 as it is today...or nearly so.

Weight the income approach. I hate triplexes for the simple reason there are very few and they seem to no act the same as either duplexes or four-plexes.

 

[OSU Beavers]

Throw in a 3-4 plex listing on the sales grid.

 

[VolcanoLvr]

Pittsburg, KS, in SE KS, is the LARGEST city in that region....roughly 20,500 population. Even bigger than Carthage, MO.

Two ways to do this come to mind:
1) go back in time to 10 years. I know....sounds illogical, but when there are no current sales, that's about the only way to get data. (and you've already said none in 5 yrs) Then do a time adjustment based on trends of all multi-family sales over the time period.
2) extend your distance (as Denis said) to larger metro areas ... and the largest is KC, KS - to the north.....or even Wichita to the west. Springfield, MO might be a possibility also...it's a college city - but then you'd have to figure out how do a location adjustment. Maybe even Tulsa, OK could be considered.

This "ain't no buck 50 appraisal" either. Now that you have copious amounts of data researched, it's time to get with the client and renegotiate the fee .... or else back out ..... especially if this is on a GSE form!

I was recently out near your area....KC down to Fort Scott. Lots of wide open spaces, jack rabbits, and miniature oil wells..........and hardly any cities of any real size. Ft. Scott is only about 9,000 population.

Good Luck!