How are small multifamily's appraised

[Nicholas W.]

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?

[Austin Hajjar]

like mentioned  by @Greg Scott above any 2-4 multi unit will be appraised based on comps because 99% of banks will go the Fannie/ Freddie route (even portfolio lenders). I have 3 duplexes in the same city 3 blocks from each other in a C+ / B neighborhood. Our first appraisal as expected and we were able to pull out our down payment. Our second property (similar sq ft and bed/bath) was appraised $50k below our first duplex. All because the appraiser can't find comps (but my cash flow is 2.5x debt) so be prepared for that and run numbers accordingly