Looking to sell a duplex but having trouble determining value
Member since 2019 · 7 posts · 3 votes
Looking to sell a duplex but having trouble determining value
Most Popular Reply
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
1yQuote from @Penny Wilkinson:
I'm in a community of 10,000 and deal with this quite often. I priced an off-grid home when there were none sold in over six years. I am currently selling a 16-unit apartment complex, the first one to sell since 1998 when this buyer bought this one!
- Sales comparison A common method that compares the property to similar properties nearby and their relative prices. This method is simple but not precise.
- Cost approach A straightforward method that adds the cost of the land to the cost of building construction.
- Income approach Also known as the rental income approach, this method estimates the market value by analyzing the property's anticipated future income and converting it to a present value estimate.
- Gross rent multiplier (GRM) A method that divides the purchase price by the gross annual rents when the property is 100% occupied. This method provides an indication of value based on the property's rents.
I try to evaluate a unique property 2-3 different ways, then make a highly educated guess based on my knowledge of the market.
The DIY Landlord Book4.7248 Reviews
17 Replies
- Lender · Nashville, TN · Member since 2024 · 700 posts · 284 votes1y
Order an appraisal & see what they value it at.
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes1y
Quote from @Penny Wilkinson:
I'm in a community of 10,000 and deal with this quite often. I priced an off-grid home when there were none sold in over six years. I am currently selling a 16-unit apartment complex, the first one to sell since 1998 when this buyer bought this one!
- Sales comparison A common method that compares the property to similar properties nearby and their relative prices. This method is simple but not precise.
- Cost approach A straightforward method that adds the cost of the land to the cost of building construction.
- Income approach Also known as the rental income approach, this method estimates the market value by analyzing the property's anticipated future income and converting it to a present value estimate.
- Gross rent multiplier (GRM) A method that divides the purchase price by the gross annual rents when the property is 100% occupied. This method provides an indication of value based on the property's rents.
I try to evaluate a unique property 2-3 different ways, then make a highly educated guess based on my knowledge of the market.
The DIY Landlord Book4.7248 Reviews - 1yGino BarbaroPro MemberRental Property Investor · St Augustine, FL · Member since 2014 · 2k+ posts · 1k+ votes
If there are no comps, then I would try to ask community banks what they would be able to lend on it. You could try to value it with the income approach, with NOI & DSCR, but that usually isn't done with smaller multifamily.
You're going to have to extrapolate out farther and see where other smaller multifamilies have traded. Rents may be high, but where are taxes and insurance. And how much deferred maintenance does the property have?
A lot of times it is pulling value from thin air. It comes down to supply and demand. Prices have been crazy because there was so much demand. Now that demand is cooling, values are dropping. You may have an advantage since there is very low deal volume in your area, and may have multiple bidders.
Good luck
Gino
- Investor · Miami, FL · Member since 2015 · 355 posts · 268 votes1y
Appraisals aren't an exact science. Appraiser will use data from whatever closely matches the subject. I've had appraisers use adjacent town comps. It's likely they may even use data of SFH with similar lot and building square footage.
- Member since 2019 · 7 posts · 3 votes1y
Quote from @Nathan Gesner:
Quote from @Penny Wilkinson:
I'm in a community of 10,000 and deal with this quite often. I priced an off-grid home when there were none sold in over six years. I am currently selling a 16-unit apartment complex, the first one to sell since 1998 when this buyer bought this one!
- Sales comparison A common method that compares the property to similar properties nearby and their relative prices. This method is simple but not precise.
- Cost approach A straightforward method that adds the cost of the land to the cost of building construction.
- Income approach Also known as the rental income approach, this method estimates the market value by analyzing the property's anticipated future income and converting it to a present value estimate.
- Gross rent multiplier (GRM) A method that divides the purchase price by the gross annual rents when the property is 100% occupied. This method provides an indication of value based on the property's rents.
I try to evaluate a unique property 2-3 different ways, then make a highly educated guess based on my knowledge of the market.
Thank you, Nathan. That is a great suggestion. I appreciate the outline.
- Member since 2019 · 7 posts · 3 votes1y
Quote from @Robert Rixer:
Appraisals aren't an exact science. Appraiser will use data from whatever closely matches the subject. I've had appraisers use adjacent town comps. It's likely they may even use data of SFH with similar lot and building square footage.
That's good to know. Thank you, Robert.
- Member since 2019 · 7 posts · 3 votes1y
Quote from @Gino Barbaro:
If there are no comps, then I would try to ask community banks what they would be able to lend on it. You could try to value it with the income approach, with NOI & DSCR, but that usually isn't done with smaller multifamily.
You're going to have to extrapolate out farther and see where other smaller multifamilies have traded. Rents may be high, but where are taxes and insurance. And how much deferred maintenance does the property have?
A lot of times it is pulling value from thin air. It comes down to supply and demand. Prices have been crazy because there was so much demand. Now that demand is cooling, values are dropping. You may have an advantage since there is very low deal volume in your area, and may have multiple bidders.
Good luck
Gino
Thank you, Gino. That is good information. The agents seem to think multifamily parcels get snatched up quickly because the inventory in this category is low, but this property also has some deferred maintenance we are trying to decide if we should address before selling or attempt as-is and reflect that in the price.
Taxes and insurance are high in West Texas but I have run the numbers at a few different price points and thankfully, it will still cash flow for an investor with 25% down.
- 1yD'Ondre Hart-RobinsonPro MemberMember since 2024 · 6 posts · 4 votes
Quote from @Penny Wilkinson:
How are appraisers approaching value on multi-family when there are extremely limited comps available?
I am considering selling a two-unit in West Texas, but only one duplex has been sold in town in the past eight years. I've talked to two local agents about possible price points to list at, but it almost seems like they are pulling numbers out of a hat. I'm curious what others have run into when comps are very limited. Rents are high in this town and I think folks just don't sell their multi-family units very often.
Hi Penny i'm actually an investor that resides in Odessa as well and my realtor actually just sold a duplex recently and in that area they have several occupied duplexes and some for sale. So if you want to get some more insight or an opinion I can send you over her contact information. - Member since 2019 · 7 posts · 3 votes1y
Quote from @D'Ondre Hart-Robinson:
Quote from @Penny Wilkinson:
How are appraisers approaching value on multi-family when there are extremely limited comps available?
I am considering selling a two-unit in West Texas, but only one duplex has been sold in town in the past eight years. I've talked to two local agents about possible price points to list at, but it almost seems like they are pulling numbers out of a hat. I'm curious what others have run into when comps are very limited. Rents are high in this town and I think folks just don't sell their multi-family units very often.
Hi Penny i'm actually an investor that resides in Odessa as well and my realtor actually just sold a duplex recently and in that area they have several occupied duplexes and some for sale. So if you want to get some more insight or an opinion I can send you over her contact information.Sure, that would be great. Thank you, D'Ondre.
- 1yD'Ondre Hart-RobinsonPro MemberMember since 2024 · 6 posts · 4 votesHeather Carrigan
Quote from @Penny Wilkinson:
Quote from @D'Ondre Hart-Robinson:
Quote from @Penny Wilkinson:
How are appraisers approaching value on multi-family when there are extremely limited comps available?
I am considering selling a two-unit in West Texas, but only one duplex has been sold in town in the past eight years. I've talked to two local agents about possible price points to list at, but it almost seems like they are pulling numbers out of a hat. I'm curious what others have run into when comps are very limited. Rents are high in this town and I think folks just don't sell their multi-family units very often.
Hi Penny i'm actually an investor that resides in Odessa as well and my realtor actually just sold a duplex recently and in that area they have several occupied duplexes and some for sale. So if you want to get some more insight or an opinion I can send you over her contact information.Sure, that would be great. Thank you, D'Ondre.
+1 (325) 212-7134 - 1yJay HurstBusiness MemberLender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
Quote from @Penny Wilkinson:
How are appraisers approaching value on multi-family when there are extremely limited comps available?
I am considering selling a two-unit in West Texas, but only one duplex has been sold in town in the past eight years. I've talked to two local agents about possible price points to list at, but it almost seems like they are pulling numbers out of a hat. I'm curious what others have run into when comps are very limited. Rents are high in this town and I think folks just don't sell their multi-family units very often.
That is crazy that there are not more 2-4 family in a market like Midland-Odessa with a ton of transient oil field workers that do not always put down roots. Do both cities zoning make it very hard to build 2-4 unit properties?
Hurst Real Estate, INC4.989 Reviews - Member since 2019 · 7 posts · 3 votes1yJay, I am not sure what the market really looks like for builders in Midland-Odessa but it is crazy that there is not more activity in multi-family in that area. Yes, there are a lot of transient oil field workers and we even rented one side of this duplex to an oil company for many years. In Midland, we found one duplex that sold earlier this year and one that is currently on the market, though it appears a little overpriced. There are more in Odessa but I was not sure if an appraiser would take those into account (or if I even want them to).
Quote from @Jay Hurst:
Quote from @Penny Wilkinson:
How are appraisers approaching value on multi-family when there are extremely limited comps available?
I am considering selling a two-unit in West Texas, but only one duplex has been sold in town in the past eight years. I've talked to two local agents about possible price points to list at, but it almost seems like they are pulling numbers out of a hat. I'm curious what others have run into when comps are very limited. Rents are high in this town and I think folks just don't sell their multi-family units very often.
That is crazy that there are not more 2-4 family in a market like Midland-Odessa with a ton of transient oil field workers that do not always put down roots. Do both cities zoning make it very hard to build 2-4 unit properties?
- 1yD'Ondre Hart-RobinsonPro MemberMember since 2024 · 6 posts · 4 votes
Quote from @Jay Hurst:
Quote from @Penny Wilkinson:
How are appraisers approaching value on multi-family when there are extremely limited comps available?
I am considering selling a two-unit in West Texas, but only one duplex has been sold in town in the past eight years. I've talked to two local agents about possible price points to list at, but it almost seems like they are pulling numbers out of a hat. I'm curious what others have run into when comps are very limited. Rents are high in this town and I think folks just don't sell their multi-family units very often.
That is crazy that there are not more 2-4 family in a market like Midland-Odessa with a ton of transient oil field workers that do not always put down roots. Do both cities zoning make it very hard to build 2-4 unit properties?
In my time out here in odessa and also working in the oil field. What I've realized is that a lot of these companies that do pay for housing stay in the larger apartment complexes because the companies pay for it. It's a lot easier for both parties and cheaper for the company. So the duplexes are in more quiet secluded areas and rent to more of your regular 9-5 workers there are more than people think but not much for sale.
- Real Estate Agent · Midland, TX · Member since 2018 · 9 posts · 2 votes1y
I own a few duplexes in Midland and Odessa. Appraisals are always an issue due to a lack of comps. Depending on the rents and condition of the property, you could find a value or at least a price that would cause it to sell. Feel free to reach out. I would be happy to help.
- Investor · Midland TX, 79707 · Member since 2018 · 6 posts · 1 vote1y
Hey guys. In a similar position as OP. Have a Midland duplex. @Penny Wilkinson - Did you have any luck selling your property?
- Member since 2019 · 7 posts · 3 votes1y
Yes, we did sell the property and all went well. Feel free to reach out.
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