Investor · Houston TX/ Syosset, NY · Member since 2016 · 18 posts · 8 votes
Recently I purchased a fully occupied duplex in Houston TX. I am looking to implement a modified BRRRR strategy and cash out refinance it. In order for this strategy to be successful hangs solely on the appraisal. Finding recent comps have proven to be difficult as there no other duplexes in the area. From an appraisal stand point, how would be the value differ or not from a single family home. In my opinion a cash flow duplex should be appraised differently than a single family home, but I am not familiar with the process. Has anyone else gone through this process? Any appraisers out there that can shed some light on this topic? Any advice would be greatly appreciated.
Recently I purchased a fully occupied duplex in Houston TX. I am looking to implement a modified BRRRR strategy and cash out refinance it. In order for this strategy to be successful hangs solely on the appraisal. Finding recent comps have proven to be difficult as there no other duplexes in the area. From an appraisal stand point, how would be the value differ or not from a single family home. In my opinion a cash flow duplex should be appraised differently than a single family home, but I am not familiar with the process. Has anyone else gone through this process? Any appraisers out there that can shed some light on this topic? Any advice would be greatly appreciated.
Mehul,
Small multi-family like 2-4 units are still appraised based on the Comparative Market Sales approach. If you can't find other duplexes in a 0.5 mile radius, expand that radius to 1 or even 2 miles.
Larger multis are appraised based on the Income approach. Find the NOI divide by the cap rate for similar properties in the area and you got the property value.
The last choice is the Replacement Method. How much will it cost to build a new duplex? That's the value.
The real value will tend to be closer to the Comparative Sales method for small multi's but you can definitely use the other 2 methods above.