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Mixed Use Property Appraisal

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runner52

Sophomore Member
Joined
Mar 15, 2010
Professional Status
Certified General Appraiser
State
Washington
Good afternoon, I am appraising a mixed use property that has a warehouse/office, apartment in the warehouse and a detached manufactured home that has been converted to real property. For the income, I am using 2-bed apartment rents to conclude rent for both the apartment unit and manufactured home (for lack of manufactured home rentals). For the Sales Comparison Approach, I have in the past appraised mixed use properties that had a manufactured home on the property used as an office and I effectively counted the mfr home as "office build out". For this appraisal, I'm thinking I can use mixed use comps that have commercial and residential and just include the mfr home in the "residential" component, not separating it out. Any thoughts of how to treat the mfr home with the Sales Approach? Needing confirmation or alternative. Thanks.
 

Red Flint

Member
Joined
May 15, 2005
Professional Status
General Public
State
Michigan
An alternative, if the office/warehouse comparables are plentiful (and that use is aligned with the H&BU), is to find manufactured home comparables of similar depreciation, extract away land values to find a depreciated value of comparable improvement, apply to the subject home area, and add as a lump sum in the Sales Comparison method.
 

DREA Dean

Sophomore Member
Joined
Apr 16, 2015
Professional Status
Certified General Appraiser
State
Pennsylvania
I once appraised an industrial/showroom property that had an apartment in it. The apartment was occupied by the manager, and I concluded that the apartment was part of the industrial use as an office or manager's apartment. I included the square footage in the total, but didn't include any apartment rent or extra value, as you indicate you've done in the past. How likely is it to rent the apartment and manufactured home to rent-paying, third-party tenants? Are they really rentable independently, or are they more like property amenities? I think it depends on the respective building areas for each use.
 

Gobears81

Senior Member
Joined
Nov 7, 2013
Professional Status
Certified General Appraiser
State
Illinois
I think the highest and best use is key here. How is the market reacting to a residence on the site of a warehouse use? How do the buyers of your mixed-use comps react to the residential component? When you say mixed-use commercial/ residential, is the commercial component a warehouse?
Also, another thing to consider- is this a house with a warehouse or a warehouse with a house? That is obviously a highest and best use/ identification of the most likely purchaser consideration, but could a homeowner wishing to operate a business out of the warehouse be the most likely purchaser? I did an appraisal not too long ago that was ordered as a commercial property since they were operating a business out of a pole barn, but came to that conclusion. Didn't do the income approach, while the sales comparison approach incorporated residential sales where they had office build-out/ business operations in a warehouse, etc. Either way, in the ICA/ SCA, you'll want to maintain consistency from the HBU conclusions.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
I appraised a retail business - about 2000 SF 1 story, with a 18' wall metal 5000 SF building. Overhead a part of that building was 1200 SF of living space. This was an owner-operator business. I valued it about $100K below the list price. They were refi'ing...not happy campers. Two years later, they threw in the towel and let the bank have it back. Sold for just under what I valued it at. They owed more than that I think.

From that I thought the living quarters were basically not contributing to the use as retail/warehouse...or one had to take a healthy haircut to the overall property value. It's a choice. I don't know which is right, but for the Manf. home I would be inclined to value it as a sold-to-be-moved item.
 
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