All Forum Posts by: Nicholas W.

 Well that's not what I wanted to hear. So in your experience the Cap rate and other supporting factors have no bearing on an appraisal?

Gino,

Thanks that's very helpful, sounds like in your case they use kind of a mix between the NOI and a CMA.

I was afraid of that as I'd rather them base it strictly on the numbers as I have more control over those.

Jason, that would be ideal, I am self employed in a seasonal industry so I have the time to fix up and add value to a property. My goal would be find a property with low rents due to some deferred maintenance/Capex put in the sweat equity and raise rents a bit while also managing myself/maintaining myself to increase the cap rate as much as possible.

I realize that I have to put a value on the time that I spend on the property, but in my position and in the industry I'm in, I often have more time than money.

I'd also like to add that I am in no way intending on buy a D class property. Looking in B class neighborhoods, just with deferred maintenance and poor management.

I have been here for a while mostly just reading and learning. One thing I haven't read a definitive answer on is how 2-4 family's are appraised. I know 5+ are typically appraised based on the Cap rate and SFR are appraised based on CMA's.

I plan to purchase a small 2-4 family and would like to know what needs to be done to increase the value in order to refi and get my down payment out for another and so on. So are small multi's based on the Cap rate or GRM when compared to the local market or something else?

Not exactly, the point increase was marginal, in this case it was $35 per month and the PMI was $110ish per month. I did the math and assuming I was able to eliminate the PMI after 3 years I would still have to live in the house for over 9 years to come out ahead. Being this is my first home and I have no intentions of being here for more than 9 years, and there is no guarantee I could have eliminated PMI after just 3 years the obvious choice was the higher rate loan.

Is this for an owner occupy property? If so I did get a loan on my own home with 3% down and no PMI. It was a special loan offered by my bank the only kicker was that the interest rate was a half point higher.