Do 2-4 unit's appreciate in value like 5+ unit's?

Question

Does 2-4 unit's appreciate in value according to it's NOI?

...or are 2-4 unit's valued by comps like SFH's?

Chris Mason · Answer

Your potential buyer can value it however they damn well please, assuming of course they are willing and able to write a check for the full purchase price.

A buyer who needs a residential mortgage, however, is limited by what a residential appraiser will say, and those residential appraisals are based on comps, not NOI.

Account Closed · Answer

@Michael Glaspie I appreciate the response, thanks! I added your line to my REI spreadsheet(s) to not forget..."simply ask your lender what guidance will they give the appraiser". Cheers.

Michael Glaspie · Answer

It depends on the purpose of the property and how you are acquiring it. The income approach used by an appraiser is typically used for commercial and investment type properties. If you are purchasing the 2-4 unit in an LLC as an investment property, the lender may choose to have the appraiser evaluated as such. This is an area where the appraiser and lender get to dictate which method is best for the situation. Since this is a case by case basis, the best way for you to get the answer is to simply ask your lender what guidance will they give the appraiser.