Appreciation based on cash flow or Surrounding neighborhood

[Andrew Hooyman]

I recently read that commercial real estate even small apartment buildings appreciate based on cash flow not on the surrounding neighborhood like single family homes do.  I am wondering if that is accurate and exactly what types of properties appreciate based cash flow i.e can it be a fourplex in a residential area or does it have to be say an 8+ unit apartment building?  I always thought the surrounding area would have at least somewhat of a factor in dictating appreciation for any property.

[Thomas S.]

Value is based on income for experienced investors business investors. In my case a property, excluding single family, is only valued on income. This is the primary reason investors strongly advise raising rent when ever possible. Condition of property of course also plays a part in regards to deferred maintenance. Individual investors will of course value differently based on the cap rate they determine fits their business formula.

 This will apply to all specific purpose rental income properties excluding single family. Single family extends to duplexes with separate addresses.