Bank Appraisal

[Greg M.]

Hello all,

I am curious how exactly banks will appraise a multi unit commercial property. Its a 6 unit building so I know they will value it based of vacancy rate and rental income correct? Is there an exact formula used ie. 3xAnnual Income-Current PITI?

I purchased at $105,000, i have stabilized it, 100% occupied for 3 months now, monthly income of $3700 - $1870 in costs = $1830 a month free cash flow (NOI) not counting for maintence % or CAP EX reserve%

Will the valuation be a multiple of NOI?

I would like to get the property re appraised for potential cash out refi, but I have no real way to even get a ball park figure without knowing the bank formula etc.  

Any help is appreciated! Thank you!

(cost breakdown)

$920 = PITI

$540= gas/electric/water

$370= Management