TL;DR: A duplex, triplex or fourplex isn't valued like a single-family home. Comparable sales still matter, but so do rents. Below-market leases, unit mix, permits and condition all move the number, so have the rent roll ready.
A lot of Orange County families own a small income property. It might be a duplex in Costa Mesa, a fourplex in Santa Ana, or a house with a second unit in Anaheim that's been rented out for years. When one of these needs an appraisal for an estate, a divorce, a partnership buyout or a sale, it isn't valued quite like a single-family home.
Two ways of looking at value
For a single-family home, value comes mostly from comparable sales. For a two-to-four unit property, I also look at income. Buyers of small rentals are often investors, and they pay attention to what the property earns.
Sales comparison. Recent sales of similar two-to-four unit properties nearby, adjusted for size, condition, unit mix and location.
Income. What the units rent for, compared with market rents in the area, and what similar properties have sold for relative to their rents.
When the two approaches point to different numbers, the report explains why and which one carries more weight for that property.
What changes the number
Current rents versus market rents. A long-term tenant paying well below market changes the picture, and local rent rules can limit how fast rents can rise.
Unit mix and layout. Two-bedroom units usually rent differently from studios. Separate meters and private yards matter.
Permitted units. An unpermitted unit may not count as a legal unit for value. I check the records.
Condition and deferred maintenance. Roofs, plumbing and parking come up often on older properties.
What to have ready
Current rent roll and lease terms
Recent operating expenses, if you have them
Any permits for added units or major work
When you need one
Estate settlements where heirs split or sell a rental, divorces with an investment property in the mix, partnership buyouts, and owners planning a sale or a refinance with a private lender. See our commercial and income property page for more.
The bottom line
A small multi-family property is a home and an investment at the same time, and the appraisal has to account for both. If you have one in Orange County that needs a value, call us and we'll talk through the scope.
Frequently Asked Questions
Is a duplex appraised like a house?
Partly. Comparable sales still matter, but income from the units also plays a role in a two-to-four unit appraisal.
Do below-market rents lower the appraised value?
They can, especially when leases or local rent rules limit how quickly rents can rise. The appraisal looks at actual and market rents.
Does an unpermitted unit count?
It may not count as a legal unit for value. I check permit records as part of the appraisal.
Just Appraisals, Inc. provides independent, USPAP-compliant residential appraisals across Orange County, including San Clemente, Dana Point, the Lagunas, San Juan Capistrano, Irvine and Newport Beach. We specialize in date-of-death and estate valuations, divorce and litigation appraisals, and pre-listing and private-fee assignments for attorneys, agents, and homeowners. More about my background here.
Have a duplex, triplex or fourplex that needs a value? Get in touch.