Duplex Appraisal Question

[Derek Meyer]

My wife and I just bought our first duplex. With our local market we got into a bidding war above asking price but I bet that others are not considering the recent hikes in rents in my area.

Purchase price: 283,000

Rent: $1,350 per unit

Appraisal: $270,000

The duplex was vacant at the time of the appraisal and the estimated 1,075 per unit and came to the appraisal amount of $270k by multiplying the estimated rent by 125 (average Gross Rent Multiplier).

A) since I have successfully filled both sides of the duplex with tenant paying $1,350, is there anyway I can capitalize on the presumed equity this could add? Actual rent of $2,700 multiplier by 125 GRM would have given an appraised value of $337,500. Or is this largely irrelevant since it is 1-4 unit property?

[Andrew Postell]

@Derek Meyer yup, so once you pay all of those closing costs again.....and have a higher rate on the commercial loan...you will see how unattractive it is.  But certainly call around.  Maybe you'll get lucky.