I know how to estimate property value based on comparable sales. The house I'm going to today is a little different from what I've seen. It was built in 1950 and is a 4/2 bath, It was originally a 2/1 and the owners added on 2 more bedrooms, 1 bath and a kitchen. So it's basically two 2/1 living areas, both with kitchens. The current owner is living in the front section and they rent out the back rooms for $450 each, the tenants share the kitchen and common areas.
It generates $900 in rental income as a room rental, but could also be rented as a 2/1. Do I comp it as a 4/2 even though it has two living areas? It is not a duplex per se, but can be treated as one. As a 4/2 it comps at $80,000, so it's a great investment property. I need a little help, Thanks
Look also to the cost approach, depreciate the original part and cost out the improvements, then depreciate the improvements to date. Then also consider the income approach as to similar rented units.
How is it zoned? The legal use will be it's highest and best use unless you are changing it, so your comparable properties need to be similar.
Consider quality, style, applicability to the area and function, deduct amounts from your comps for the negative aspects of the subject, bring the comps in line to the subject.
If the property could be a 4/2, in the market, you might look at it that way and add the cost of the other kitchen less cots to rehab. Could it be a mother-in-law quarters? With that, again, consider functional obsolescence.
Of the three approaches, you'll need to decide which is most appropriate and weigh each of the results for a final value.
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