Question about forced appreciation

[Taft Love]

Hi all, I hear a lot about forcing appreciation on multi family deals by rehabbing and raising rent. Is this specific to 5+ unit properties or can it apply to 2-4 units as well? -Taft

[Brent Coombs]

Originally posted by @Taft Love:

I think I did a poor job of asking the question. It is my understanding that one of the primary drivers of increased appraisal value for multi-family properties is rent increases. Comps are weighted differently for commercial than for sfr.

If I buy a duplex or triplex and increase the rent (without making any other changes), will that have a positive effect on the appraised value? In other words, is is possible to force appreciation by increasing the revenue of a small mfr (2-4 units)?

The short answer is: no. What it does get you is: better ROI (unless vacancies go up)!

ie. To "force" it, either spend money improving it, and/or, buy it for less than it's worth!