I live in Florida and am interested in buying a triplex that is one block from the beach as a weekly/monthly rental. It is over priced imo and has been on the market for over a year with a realty company starting at $650K. Now after one year the owner is doing a buy owner sale and it is down to $450K She bought it for $150K in 2000. My question is this. I found a 3/3 stilt home built in 2000, that is literally one block away from this triplex that has a little larger lot that sold for $355K two months ago. In comparing property values, would a triplex be valued higher then a single home since it is income producing?
(Triplex 3/3 has wood structure built in the 30's with smaller lot and less square footage of the house that is a 3/3, built in 2000 that is a stilt home that sold for 355K.
Based on purchasing at 400K I feel that I can cover my costs easily with a 30% occupancy rate. I am hoping to use this property as a reality check for the owner unless of course triplexes are valued higher. Thank you in advance.
I honestly don't know the answer regarding triple value. They appeal do a different audience and since market drives price.... That being said, if she is a motivated seller I would put together a compelling argument and go talk to her. What do you have to lose?
Plus in the end the value doesn't matter as the driving factor is what numbers make the deal work. There have been many properties that the house is priced "right" for it's"worth" but was too high for my business model and I didn't buy it.
I suppose you can do whatever comparison you like to gain insights and comfort, but be aware that an official appraisal (like the one your bank will order when deciding whether to finance it) will NOT use a SFR as a comp. They will only use "like" properties as comps. Therefore, you should try to find comps from other triplexes to come up with a market value.
Thanks Elizabeth, so I am walking away with the idea that if my numbers work for a $400k purchase price at a 30% occupancy rate (which I feel I can easily get up to a 50-70%) then I should feel good about the price even though in reality the true value may be lower based on this newer build comp?
Thanks Andrew. I have yet to find a triplex for a comp. But I will keep looking. This property appeals to me because It allows us to own a beach house to use when we want while having it work for us. So, with the emotional ties I am willing to pay more then a typical investor just looking at the bottom line. However, I don't want to over pay either:)
I have since started reading on appraiser forums. I have learned that multi-plex/triplexes tend to value lower then single homes except when in areas that are high rental areas such as college towns. So I am going to assume that a beach community would also fit this scenario. I am going to contact an appraiser I believe at this point to get an idea of value before putting in an offer.
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