Appraisal- How much does the rent affect the value?

Question

So I know for 1-4 unit properties the value is based on comps but does the amount that the units are renting for have any affect on value? Even subconsciously on an appraiser's mind?

Corby Goade · Answer

No, a 1-4 unit is appraised based on comps, as you mentioned. You are going to have a residential appraiser doing the work and they will be looking at it through those eyes. The market dictates the rents, not the appraiser. Heck, I've seen plenty of properties in my market sell for tens, even hundreds of thousands of dollars above the appraised price, so appraisals often don't even influence sale prices, let alone rents.

Account Closed · Answer

No, your increase in rent will not raise the value of the sales comparison approach on the appraisal as it is not considered during that valuation.

Rigo V. · Answer

@Corby Goade I think you misunderstood my question. I am asking if an appraiser looks at the rents and if that somehow subconsciously affects what he appraises the property for.

For instance I bought a vacant property and the appraiser for the HML noted on the appraisal total rents as $2K after the rehab. I rehabbed the place and my rents are actually $2645. Does that make any difference on the value? To me because I wouldn't see my property for the amount he appraised it for since my property cashflows really well even at that price.

Obviously I realize its all values for purchase and refi are based on comps but wanted to see what community thought.