• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Appraising Single-family Rental Portfolios

Status
Not open for further replies.

Gobears81

Senior Member
Joined
Nov 7, 2013
Professional Status
Certified General Appraiser
State
Illinois
In several of my markets, we've seen a "de-conversion" trend where an investor comes in an buys ALL of the units in an existing condo development in order to "de-convert" and use the building as a traditional apartment. I'm curious if people think a bulk sale analysis or a discounted sell out analysis would be necessary to keep the state off my back?
Seems like it would be a highest and best use issue, and I doubt that a discounted sellout analysis would even be appropriate. As shoddy as other parts of our state government may be, I have no doubt that those working in the real estate division of IDFPR would have the insight to understand that.

I have also analyzed multiple groups of condo sales as a multi-family project in the past. Though, it sounds like the OP's case might not be as relevant in analyzing as a MF project, due to the locations being scattered.
 
Last edited:

BRCJR

Senior Member
Gold Supporting Member
Joined
Sep 20, 2005
Professional Status
Licensed Appraiser
State
Virginia
For lending purposes the discounting applies &state board would be involved if you failed to do it. USPAP is explicit that you are required to do this and be familiar with regulations involving your client even if they are ignorant of the law. Saw it many times, lender not wanting to pay. One redo was a CR using one sample report x 42 properties. Examiners caught it and I redid the whole remaining project
That would be relative to a subdivision. These, referenced, are spread out over multiple locations.
 

Michael S

Senior Member
Joined
Mar 18, 2009
Professional Status
Certified General Appraiser
State
New Mexico
I've got an annual appraisal I do for a development of 150 single-family homes in a subdivision that operates like an apartment complex. It's a former off-base military housing project. The first time I did it I looked at the sell vs. rent scenario in my highest and best use analysis but quickly decided that in a market of about 15,000 with only a couple hundred home sales a year at best, 150 additional houses on the market were going to take a while to sell off. That and the value of a fair quality house in a small market was going to be less to an owner/user than as part of a group to an investor. In the end I've compared it to other similar projects around the country, usually a group of duplexes built in a small development of 50-100 units. It helps that a sister property to my subject in the next closest city to the base sold just before I did the second annual appraisal so I had a perfect comp - plus confirmation that the H&BU was renting versus a sell-off scenario. I've yet to find another good sale comparable of a large group of SFR in one location operating like an apartment. It's always duplexes or 4-plexes.
 

alex gilbert

Member
Joined
Feb 21, 2003
Professional Status
Certified Residential Appraiser
State
California
The primary tests we use in deciding if a bulk value is necessary for multiple SFRs are: Prior acquisition - were the properties acquired in bulk, or assembled over time? Absorption - can the portfolio be dissolved within a 12 month time frame? Physical proximity - are the properties located close together, or are they separated over a distance? Another decision isn't really for the appraiser, but for the client, assuming a lending scenario. Do they wish to underwrite on the aggregate retail value or income? Some loans on these pools are structured in such a way that an income analysis based on the NOI is a necessary component in the underwriting.
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks