Bank appraisal for small multifamily - what method?

[Jovan Hsu]

My wife and I are considering buying a small multifamily that is currently used as a duplex but has the potential to be turned into a 4-plex. For financing, the plan is to buy all cash using short term private lending, convert the property into a 4-plex and rent it out, and then refinance in order to pay back the short term loan. My question is, when the bank assesses the value of the property, will they use local area comps or base the valuation on the property's income?

Would also appreciate any thoughts you have on this plan as we are newbies just starting out. Thanks!

[Mike Wood]

@Jovan Hsu In my area, I own duplexes that are pure investment properties (both units rented).  The bank appraisers use both methods, but more heavily rely on sales comps.  But talking to the appraisers, they do calculate the value based on income, and can reduce the value determined if the income is too low.  I dont think they can increase the value due to high rents, as it is not justified by the sales comps.  

All of my loans are conventional residential mortgages, this may not apply for commercial loans.