Seller listed 2 separate Quadplexes as 8-plex? Questions inside..
Seller listed two 4-plex units as an 8-plex and is selling as such. I'm wondering how this falls under appraisal and getting a loan? Would this be commercial since it's an 8-plex or would it still be residential since it is two 4-plexes? I'm just wondering if they did this because it wouldn't appraise high enough unless they can use their rents and CAP rate. Does anyone have any idea how to go about handling this if I want to proceed with an offer on it?
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Hey @Ryan James I looked on on a deal like that few month ago.
Often when appraised as residential 2-4 units, it’s going to be by the unit and Not Caprate, income based.
Are the 2 buildings on the same title / deed? Or separate titles?
Either way, I was advised by the lender that if the building are side by side there is a possibility to regard them as commercial.
The point is, that it is easier to add value by increasing NOI when property is appraised by it's income. If it's not income appraised your value add is only based on price per unit.
Talk to lender and see how would the “Spin the deal” is it residential Or commercial...?
Sorry for any typos- done by phone