just got put onto this site by an investing colleague of mine - what a phenomenal resource.
I am looking at a 4-plex, it'll be my second rental purchase, already have one established, albeit SFR.
When I look at comps the nearest 4 plex units are all 2 bed 1 bath, and one sold as recently as Dec 2014, so is a good guide for me.
What is a good strategy to estimate value in the 4 plex of interest to me which is 3/2 as it's the only 3/2 layout compared to the other 2/1's.
I have averaged number of rooms and applied this to larger 4 plex, eg sold for value divided by 8 (2bedx4 units), divided by 12 (2 bed, 1 bathx4) , then multiplied this by 12 (3bedx4) and 20(3bed, 2 bathx4) and I have also used square footage ratio's to gain a value on the larger property.
Are any of these methods feasible and if there's a better method, I'd love to hear it.
For the record, these comparative units are all in the same subdivision, are architecturally similar, so direct comparisons in this case are pretty close.
Thanks in advance,
An appraises starts with the comps and then adjusts for the differences. You have two key differences, based on what you've written. Bathrooms and size. Bathrooms are a straightforward adjustment. The appraise will establish the value of an extra bathroom. IDK what it might be in your area, but lets say its $5000 per bath.
For the size, the appraiser will start with average sales prices per square foot for similar properties. Then they will take about a third to a half of that as the adjustment factor. Just adding 10% more footage doens't increase that value by 10%. The effect is smaller than that. So, then the appraise will take the difference in size times this factor to determine an adjustment for the comps. If yours is, say, 200 sq.ft. larger and the average selling price per sq.ft. is $100, that appraise would add $7-10K to the comp sales proce to account for the difference in size.
If you have enough comps you might be able to figure this out on your own. Its something of one of those word problems from high school that translates into a "two equations in two unknowns" problem. The difficulty is there are a lot of other factors. You might also try to speak with appraisers in the area.
ok thanks, so in my case there's a difference in sq ft of 700 between each multiplex in total - according to the listing. So that multiplied by the price per square foot divided by 2 or 3, will give me a good figure for difference in price.
Is that in addition to calculating the additional bedroom and bathroom per unit, or in place of ?
I'm trying to work out an offer, before the appraiser sees it.
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