Hi, how do I determine ARV of a 4-plex if it is the only one in the area? Single family homes of the same size are listed for around $300k. This is an off market deal, so there is no broker, and I don't know what similar sized single family homes have sold for in the past. I really appreciate all responses!
Rental Property Investor · Milwaukee/Madison, WI · Member since 2023 · 29 posts · 8 votes
1y
With a 4-plex, it still falls under the residential bucket, so appraisers will lean on comparable sales rather than just income. If there aren’t other fourplexes nearby, they’ll typically pull duplexes, triplexes, or even larger single-family homes within a reasonable radius and then adjust for size, unit mix, and condition. That’s why those $300k single family comps you’re seeing are relevant, even if they don’t tell the whole story.
That said, I’d still run the income approach in parallel. Figure out your Net Operating Income and divide by the local market cap rate. While the appraiser might not base their valuation entirely on that number, investors do care about what the property can produce. If the income-based valuation comes in stronger than the sales comps, that’s leverage for you during negotiation and a great data point for refinance conversations down the line.
I would look at it as comps will drive the official appraisal because it’s a 4-unit, but the income numbers tell you whether the deal actually makes sense as an investment. Having both perspectives will give you a much clearer picture of what you’ve really have.