All Forum Posts by: Penny Wilkinson

 That is crazy that there are not more 2-4 family in a market like Midland-Odessa with a ton of transient oil field workers that do not always put down roots. Do both cities zoning make it very hard to build 2-4 unit properties? 

@Penny Wilkinson

If there are no comps, then I would try to ask community banks what they would be able to lend on it. You could try to value it with the income approach, with NOI & DSCR, but that usually isn't done with smaller multifamily.

You're going to have to extrapolate out farther and see where other smaller multifamilies have traded. Rents may be high, but where are taxes and insurance. And how much deferred maintenance does the property have? 

A lot of times it is pulling value from thin air. It comes down to supply and demand. Prices have been crazy because there was so much demand. Now that demand is cooling, values are dropping. You may have an advantage since there is very low deal volume in your area, and may have multiple bidders.

Good luck

Gino

Appraisals aren't an exact science. Appraiser will use data from whatever closely matches the subject. I've had appraisers use adjacent town comps. It's likely they may even use data of SFH with similar lot and building square footage.

I'm in a community of 10,000 and deal with this quite often. I priced an off-grid home when there were none sold in over six years. I am currently selling a 16-unit apartment complex, the first one to sell since 1998 when this buyer bought this one!

• Sales comparison A common method that compares the property to similar properties nearby and their relative prices. This method is simple but not precise.
• Cost approach A straightforward method that adds the cost of the land to the cost of building construction.
• Income approach Also known as the rental income approach, this method estimates the market value by analyzing the property's anticipated future income and converting it to a present value estimate.
• Gross rent multiplier (GRM) A method that divides the purchase price by the gross annual rents when the property is 100% occupied. This method provides an indication of value based on the property's rents.

I try to evaluate a unique property 2-3 different ways, then make a highly educated guess based on my knowledge of the market.