High appraisal looking for advice

6 Replies

I bought a 5 unit for 114,000 3 years ago I did some Reno and the building NOI is near 35k a year

I am applying for a HELOC to buy more and Pat of the process is getting an appraisal.

I'm not sure what to expect or how I can contribute to getting the highest possible value.

I don't want my cheap purchase price to hurt me. I figure if it makes 35k then 10% cap puts its value around $350

Any advice ?

@Edward Dandrea  If it's a multifamily property, its value is based on its NOI. So, to make the NOI higher, you could improve the condition of the property or improve its operational efficiency ( or decrease operational cost).

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@Edward Dandrea As others have said the "cap rate" while at 10% is a decent cap rate, may not be what is commanded in your area. So with an NOI, that you can defend, the appraiser will look at the local cap-rates that properties similar to your demand in its area.

Now I'm no appraiser but especially on a commercial property the purchase price should pay very little weight into the value. It really is all about the NOI and condition of the property.

@Edward Dandrea   they will use an income approach. You will need to produce income and expenses.  Also provide a list of any updates. They will want to know unit rents, lease etc. They will not just come and tell you what you a value based on comps although that is not to say recently sold 5 units won't influence them at all.