Valuation of Small-MultiFamily

[David Lee Hall, III]

Traditionally my partners and I have used the "typical" % of ARV minus rehab to calculate offer prices. We also sometimes use the model from Flip Your Future (take profit desired and subtract expenses to get max offer). There are countless ways to come up with a number you will offer. BUT, if you are focusing on BRRRR strategy, then there is one key piece. What will it appraise for? That above all else dictates if you can get your money back and "Repeat". We are generally fairly accurate for single-family homes. Where we have had issues in the small-multifamily class. Duplexes and Triplexes especially. The number of retail-level sales to perform a comps-based approach just isn't there in most neighborhoods. Sure, I could run the 1% rule or 50% rule and base offer price off of one of them but no appraiser is going to use those. so the odds of the Refinance being at the desired price point is low.

How do you successfully overcome this problem?