Comps for 2-4 units multi family

[Tom Doherty]

BP - Doing some research on the BRRRR on 2-4 unit properties. My question is, when you request to refinance the property, what is the appraiser looking at when it comes to comps for a 2-4 unit property? Cap rate? or is it similar to residential/single family comps?

Please provide an example. 

I appreciate the help. 

[David Boroughes]

They will usually complete the 3 approaches to value;

sales comparison (what similar properties have sold for)

income approach (Cap rate and other investment calculations using market rents and typical expenses)

cost approach (how much to build the same from scratch)

Be careful when refinancing as the appraiser will typically be told the number ($ amount) the bank needs to see, this can distort them from doing an actual market value appraisal.