Rental Property Appraisal

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.