Appraisals for Apartment & Multi-Family Property
Apartment/multi-family properties are income-producing, with revenue being mainly generated by a monthly rental rate paid by residential tenants. Additional revenue from parking, laundry income, storage units, late fees, etc. would likely also be considered as additional revenue streams in the appraisal.
Appraisal Value Approach
The market rent for a particular apartment property will be determined by its location, average unit size, quality, condition, building amenities, and age. In determining the value of an apartment building, the appraiser would consider applying all three approaches to value.
In the income approach, the appraiser would determine an appropriate capitalization, or an overall rate to apply to the net operating income (NOI) of the property. Capitalization rates for apartments can widely vary based on the risk of the investment. The rates can depend on the property’s location, quality, age, condition, and other factors. In the sales comparison approach, an apartment community is typically valued on a price-per-unit basis or a price-per-rentable square foot basis. The Cost Approach is only typically used if the building is new construction, or a newer property.
Appraising apartments is best performed by experienced appraisers like Gardiner Ray, who have a thorough understanding of the complexities involved in unit appraisal scenarios. Contact us at 214-975-8242 for more information.