Multifamily ARV/ Appraisal

[Zachary Olley]

For South Jersey Investors and appraisers. What are think you look for when determining the ARV for a multi family? It can be hard for someone new and only know to look at local comps but I feel like comparing a MFR to a SFR is not the right way to go.

[Mike Bonadies]

@Zachary Olley determining ARVs of MFHs in South Jersey's less populated spaces can be very difficult. @Stephen Kappre made a great point of getting a local expert agent who can help you out. That said understand MFHs in the Southern NJ can be hard to pin. There are a number of factors that drive that:

1. Limited amount of sales that occurred and were recorded - This is a big problem in the southern most counties. Many MFHs are seller financed and the sales never get recorded naturally depressing the market. This is seen in places like Salem, Millville, and surrounding towns.

2. Everything is a unicorn - Most MFHs in South Jersey are pre-1950 and none of them were built the same. It makes getting apprisal difficult because sqft, bed/ba count, and features change wildly from one to another. Take for instance Millville where I can have six MFHs right next to each other and zero of them will look alike. 3000 sqft duplexes get appraised to be just as much as 2700 sqft triplexs

3. Income Approach Doesn't Help - This is because rental comps are showing less and less on the MLS. What's the most effective tool for filling units in Deep South Jersey...a yard sign. Old school landlording is very much alive down in South Jersey. This means there are very limited amount of units that rented out on the MLS driving the rental comps down and puts pressure on the income approach for small multi unit buildings.

Best luck with your search!