Real estate appraisal for rental property
isn't
the same as for single family homes. And the rental advice in any real
estate agency won't be cheap and really helpful, because they are too
interested in further cooperation with your business to earn some money
on your rental investment. If you were looking at a
24-unit
building, it would be difficult to find similar ones nearby that have
recently sold. Therefore, a market analysis using comparable sales
isn't normally used.
It is also not ideal to use replacement costs either. How do you figure
replacement cost if there is no land for sale nearby with proper
zoning? This is used as a secondary method, though, and can tell you if
maybe you should be building instead of buying.
Investors buy rental properties for the income. Therefore it is the
income that is used to determine value. The rate of return expected by
investors in a given area gives you the capitalization rate, and this
is what you use to accurately appraise an income property. You should
start with the gross income. Subtract all expenses, but not including
loan payments. If a building's gross income is $82,000 per year, and
the expenses $30,000, you have a net before debt-service of $52,000.
Now apply the capitalization rate to this figure. This is the simplest
example. The calculation dealing with other types of property
appraisal(timeshare rentals for instance), will much more complicated.
You can use the ready msl listing, which are available in web to makeup
your mind on the topic you need.
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