Apartment Appraisal – Multi-Family Valuation
While an apartment valuation may seem simple but apartment properties are one of the most diverse and complicated commercial property types. Apartments vary widely from amenities, class, style, size, location and more. We have conducted typical conventional apartment appraisals, proposed construction multi-family valuations, low income apartment appraisals, HUD apartment valuations, special financing and tax credits (LIHTC) apartment appraisals, failed condominium conversion project appraisals, historic apartment appraisals, FNMA/Freddie Mac multi-family appraisals, garden-style apartment appraisals, mixed-used apartment valuations, high-rise apartment appraisals and more.
Appraising an apartment can be challenging. There are many factors that a commercial appraiser must deal with when taking on an apartment appraisal assignment. It is imperative to understand these factors as it will affect the appraisal. The following is a sampling of some of the major questions and factors we consider when appraising an apartment.
What is kind of apartment is it? Garden Style Apartment? High-Rise? Modern?
Is there a manager on-site?
What amenities does it have? Pool? Clubhouse? Spa? BBQ? Gym? Laundry room? How do the amenities compare to other nearby apartment complexes?
Is it rent controlled? Section 8?
Is the contract rent at market?
What is the Highest & Best Use of the property?
How does the location of the subject property compare to other apartment properties?
What is the parking ratio? Is there adequate parking? Is the parking covered? Are there carports? Garages?
Condition of the building? (subject property vs. other apartment properties)
Is there excess/surplus land?
Are there any easements/encroachments?
Is the property in a flood plain?
Is there deferred maintenance? If so, how much will it cost to cure?
Appeal? (subject property vs. other apartment properties)
What do the local brokers say about the current apartment market conditions?
What are cap rates for apartment properties in the market?
What are the most recent sale transactions of comparable properties in the neighborhood?
What are the PGIM and EGIM multipliers in the market?
Is the apartment complex stabilized? If not, how long will it take to reach stabilized occupancy?
What is the density of the apartment complex?
What is included in the kitchen?
How do the bathrooms, living rooms and bedroom at the subject compare to other apartment complexes?
What are the neighborhood demographics? Household income levels? Population density?
How does the unit mix compare to other apartment complexes? Studios? 1BD/1BA units? 2 BD/2BA units?
What concessions are typical in the market?
What is the size for each unit? How does it compare to other apartment complexes?
What is included in the rent? Water, Sewer, Trash included in the rent?
What is the historical occupancy of the subject?
What is the scope of the assignment?
Year built and effective age? (subject property vs. other apartment properties)
What is the remaining economic life of the property?
Construction quality? (Steel, Concrete Tilt-up, Masonry, Brick, Wood-Frame)
What are the marketing and exposure times for apartment properties?
Building and site size? (subject property vs. other apartment properties
What is the zoning? Allowed uses? Parking requirements?
Do the current improvements conform to zoning?
Topography? Shape of the site?
What is the sales and ownership history of the subject property?
What are the property taxes? Is it over assessed? Mello-Roos?
What are the supply of demand characteristics of the apartment market and submarket
What are asking rents, vacancy, net absorption of the submarket and market?
Are they any proposed or projects under construction that will compete with the subject?
What are the operating expenses of the subject property? How does it comparable with other apartment properties?
As you can see, appraising apartment complexes can be challenging. It is extremely important that you use a qualified, competent and experienced commercial appraiser for all apartment appraisal assignments. We have dedicated apartment appraisers that form a specialty practice group at Vanguard focused on all apartment properties in California. Please contact Vanguard Realty Advisors for all apartment appraisal assignments.
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