Between books I've been reading and information I've researched, I'm confused about how a small multifamily property's value is determined. With mid-large multi's, I understand that the value is based on income. I thought I heard that small multifamilies (2-5 units) were the same, however, I've also heard that they are based on comps instead of income.
So my question is: How are small multifamily properties valued? If it is based on comps, does that mean it's based on comps of other multifamily properties or SFR's in the neighborhood?
Any property that is 1-4 units is residential and that value comes from comparables.
Any property that is 5+ units is now commercial real estate and commercial real estate gets its value from the income it produces. So the value will come from the CAP rate or comparable sales that recently occurred.