Commercial ARV Valuation

[Scott Michael Gross]

Hi All- I am considering my first purchase of a property with more than 4 units (9 for this one, to be exact). My broker told me that most appraisers do not include repairs or vacancies when calculating the NOI. As I am trying to get an estimate of what the ARV will be, would the BP community agree with this? Obviously, there is a big difference in ARV with and without these items.

Thanks!!

[Amir Khan]

Quote from @Scott Michael Gross:

Hi All- I am considering my first purchase of a property with more than 4 units (9 for this one, to be exact). My broker told me that most appraisers do not include repairs or vacancies when calculating the NOI. As I am trying to get an estimate of what the ARV will be, would the BP community agree with this? Obviously, there is a big difference in ARV with and without these items.

Thanks!!

In commercial multifamily, your ARV would simply be 'what your units would rent for after they are repaired/upgraded'. That increase in rent, should translate into increase in NOI, which would be your new value.