Grm

[xm4321]

I am working on a single family rental home, the reported sales for the neighborhood do not reflect rental properties, I used the MLS system leased section to find rental homes in the area for my single family comparable rent schedule. the rental homes are not for sale but listing of rented and for rent homes in the area, the homes used in the comparable grid are reported single family home sales in the neighborhood, most listing in the area do not list as single family income properties. I have established my market rent for the subject, ( it is not currently rented ) and I am at a loss to develope my GRM without a sales price for my rental homes can someone give me some advice, I have not worked an income property in a long time.
Thank You
Bryan

 

[stefan olafson]

Expand your neighborhood and find some sfd rentals. Call property management companies, call REALTORS, call your local bankers and mortgage brokers.

They are out there, you just have to look.

These will also provide you with a better idea of market rent on your subject property.

 

[xm4321]

Yes

I have plenty of rental information as far as rental properties in the area, I lack sales that were marketed as income properties, most single family homes in the area, if not all are listed as single family not single family income properties, see where my delima is. I do not have sales figures for the rentals to use for me GRM. as far as establishing the fair market rent for my subject I have the data. I know I am stressing and missing it. Ah what a life.

 

[stefan olafson]

That's why I suggested you talk to REALTORS, Bankers, Mortgage Brokers, etc..... That is how you find out which of those income properties that sold as single family is actually being utilized as a rental.

Property management companies often times have homes they are managing that are full time rentals and I've seen many people with two homes, one not selling, utilized property management companies to rent their houses.

Keep digging... Some appraisal work is hard, this will require some hard work and due diligence on your part to complete.

Keep Plugging Away.

You never know when a phone call may lead to more work. So it's not just wasted time on your part.

 

[Lawrence R.]

Without sales of homes that were rented at the time of contract, I don't know how you can come up with a MGRM. Could you extract a cap rate from multi family, such as duplex and quads? It is like navels to mandarine, but better than apple to orange.

I bet though, if you dig deep enough you can find one or two sales to hang your hat on that were rented when they sold. They are rare in small to medium cities, and are often not reported that way.

Check the "Off market" listings and you may find they sold 4 or 5 months later, rented.

 

[xm4321]

Thanks

I got it, called an investment Mgt company and he sent me in the right direction, to get sold income single family homes.
So now I get to spend the rest of my night with research lol but hey at least I am working and that is good for a change.....

I am going to do a history search of each rental in the rental listings and find the sold price for them, then find the most recent that are like my subject? sound like I am on the right track?

 

[Lawrence R.]

Dude, I am glad you found some sales.

 

[Mike Boyd]

Why are you doing the income approach on a SFR? They are not typically purchased as income producers. Therefore, there is insufficient data to extract a reliable GRM. End of discussion.

 

[John Hopkins]

Bryan,
You are lucky. I have faced a similar problem several times and not been able to find sales of SFR for income purpose. Below is a method an old mentor of mine suggested.

If you were able to establish a market rent for your subject then you should be able to establish market rents for the comparable sales you used and other sales of homes in the market area. Place 8 to 10 of them in an Excel worksheet, using market rent & sales price for each, calculate a GRM for each sale. This should give you a credible opinion of GRM for the market place. I then put the whole spread sheet in my report, explain how it was created.

After that on page 3 of the 1004, I use the above GRM to establish a value based on market rent for subject. On the Summary of Income Approach, I say see attached and then comment that since homes of this type are typically not bought and sold for investment purpose that the income approach to value is worthless and was given no weight in determining market value of the subject.

 

[Thomas Fiehler]

If you have sales that are very similar to the rentals then you might be able to arrive at a GRM by dividing the sales price of the non-rental by the rent and arrive at the GRM that way. Not ideal but it is acceptable.