Multi Family Appraisal Question

3 Replies

Hi There BPers.

I'm looking on a deal that has 8 units divided between 2 Fourplexes. 

Assuming that the 2 Quadplex are on 2 separate titles, I have two options to finance the deal. 

1. Is to have the 8 units considered as one purchase and apply the cap rate valuation approach. This will add more equity to the deal but the loan terms are going to be less favorable.

2. Have EACH Quadplex purchased and appraised separately, appraised with GRM or Comps/ Unit price. But better loan terms fixed for 30 years.

My question is,  if taking option 2. Did anyone came across a situation when a Residential Multi Family 2-4 units, was appraised with the Cap rate approached and had this accepted as conforming, Fannie Mae loan

by lender? 

Cheers H.

@Hadar Orkibi , I'd be very surprised if anyone responds with a (provable) "yes" answer. But, if the Seller only considers the market (commercial) cap rate rather than sold comps, that might work in your favor as far as purchase price, and, you do still have the option of financing both of them at (a lower) conventional residential interest rate, rather than commercial! Good luck...

Thanks @Brent Coombs   The seller is working on about 10 Cap. that is the same value of about 40k per door. the units require rehab and the building need new roofs. 

some some capex there to be spent. 

The deal wouldn't stack up with lower Cap rate do to the Capex that need to be spent.

Originally posted by @Hadar Orkibi :

Hi There BPers.

I'm looking on a deal that has 8 units divided between 2 Fourplexes. 

Assuming that the 2 Quadplex are on 2 separate titles, I have two options to finance the deal. 

1. Is to have the 8 units considered as one purchase and apply the cap rate valuation approach. This will add more equity to the deal but the loan terms are going to be less favorable.

2. Have EACH Quadplex purchased and appraised separately, appraised with GRM or Comps/ Unit price. But better loan terms fixed for 30 years.

My question is,  if taking option 2. Did anyone came across a situation when a Residential Multi Family 2-4 units, was appraised with the Cap rate approached and had this accepted as conforming, Fannie Mae loan

by lender? 

Cheers H.

 Not if it's a residential appraiser for a residential lender, no.

Chris Mason, Lender in CA (#1220177) and California (#1220177)
415-846-9211

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