Comps for 2-4 units multi family

5 Replies

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. 

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.

Originally posted by @David Boroughes :

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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.

 


Interesting... I'm a newbie investor. I recently refinanced two different properties with the same bank around the same time. My observation was that it was very important to the bank to have independent appraisals. The appraisers who showed up at my properties were from different companies and they were not affiliated with the bank. I expected this to be the case since if I was a lender I would think it would be in my best interest to get independent value appraisals. I find it troubling that banks would dictate the "independent" appraisers to come up with different values from an otherwise "actual market value appraisal".

But then again I'm a relative newbie, I'm learning something new everyday. Does this happen often?

Cheers... Immanuel

Depends on the bank, some local banks may deal with the same appraisers all the time, the appraisers always see to want to know the loan value to for some reason... kind of like when they get to see the contract price or P&S on a sale property before completing the appraisal. All I am saying is it could influence the value they arrive at if they know before hand the loan value...

I'm waiting for my refinance right now. And the appraiser certainly asked me how much I was going for. I did not tell him. I said, of course I want the highest amount possible, naturally, for a cash out refi. He didn't push me for it when I said that. :)

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