Is the valuation for two 4-plexs done as a SF or MF?

Question

Let me expand on the Subject line.

I understand that 1 to 4 unit properties are considered single family from a loan and valuation (comps) standpoint. Since I am looking at purchasing two fourplexs as one deal, would it be seen as a multifamily or two single family properties?

I am trying to understand this from two perspectives:

1) Loan: commercial or two residentials? Commercial I would guess.

2) Valuation: Intuitively I will value based on NOI, but will the bank for the appraisal? Will the buyer when I look to sell down the road?

Merritt Noel · Answer

Account Closed - Let me clarification something for you regarding the financing piece.  You can do conventional financing for the purchase 1-4 units.  I would suggest constructing them as two separate purchases and using conventional financing as opposed to commercial for obvious reasons.  The one thing to keep in mind on the financing piece is the maximum LTV/CLTV = 75%.

As for the appraisal here is what would be required for conventional financing...this is taken from Fannie Mae guidelines.  "On the single-family properties that will be rented, the appraiser must use the Single-Family Comparable Rent Schedule (Fannie Mae Form 1007) as an attachment provided the borrowers do not qualify with the full payment.The appraiser must develop an income approach to value that is supported by rent comparable and must consider that information in the final reconciliation. The comparables should be in close proximity to the subject in order to establish the existence of a viable rental market in the neighborhood."

Hope this information helps!  Good Luck and feel free to contact me directly with any more questions.