In my market that would significantly over value the ADU. What I am seeing from appraisers is
1) they want to use sold properties that have an ADU. Unfortunately for those that added an ADU, these comps typically place a value far less than the hands off cost of adding the ADU.
2) in the absence of adequate comps, these ADUs are valued as an amenity and typically gets an even lower valuation than the low valuation from comps.
ADUs typically have good rent to add costs. If it was valued like commercial properties based on NOI and cap rate, then it would be an easy decision to add ADUs but in my market the appraisers usually value ADUs tens of thousands of dollars less than the hands off costs to add the ADU.
I’m underwriting some infill projects in Central Florida, and im running into an issue.
I'm trying to calculate the ARV of a townhome with a detached ADU, but there are no direct comps.
How would you approach this?
Im using stand-alone townhome comps for the main unit then calculating a separate value for the ADU based on its rental income.
Curious to hear how other investors and appraisers would evauate these?
Don't want to do it that way. Appraisers are going to use comps that have ADU's, even if they have to go further. Best action here is to contact a local appraiser and ask them the questions that will impact ARV which removes any guessing.