Do Banks appraise Rentals the same as Primary Residences?

[Dakota Hicks]

Hey all,

I'm looking at doing the BRRR strategy and I'm having trouble finding the ARV of the property. I'm looking at investing in college rentals that are single-family houses rented by the room that are zoned multi-family. There are no sales of these types of properties that are in good shape, all of the sales are from distressed properties. I'm wondering if the bank's appraisal will only look at other multi-family zoned properties for comps, or would include other properties in this case since they are both technically single-family homes. There are other comparable homes that are nearby, but they are not zoned multi-family. Do appraisers even care what the owner is using the property for?

[Frankie Woods]

For appraisals, the zoning doesn't matter significantly. If the properties arer less than 5 units, they will comp other properties that are similar in size, bed/baths, and condition. So in your case, the appraisal will be similar in scope to a primary residence. They will look at other SFRs in the area to come up with an ARV. If your proeprty is in good shape, and the appraisor can't find adequate comps, it's going to be hard for you to know ahead of time how it will come back. However, in my experience in STL, the appraisals have been very conservative. And no, unless you are getting a commercial building appraisal, the appraisors generally do not care how the property is being used.