Residential vs Multi-Family Real Estate Valuation Method
Residential and multi-family real estate properties are valued using different methods, including:
Residential:
Comparable sales analysis (CMA): compares recent sales of similar properties in the same area to estimate the value of the property.
Cost approach: estimates the value of a property by calculating the cost to rebuild or construct a similar property, then subtracting depreciation.
Multi-family:
Income capitalization approach: uses the property's net operating income (NOI) and the cap rate to determine its value.
Gross rent multiplier (GRM): estimates the value of a property by dividing its gross rental income by its purchase price.
Both methods take into consideration various factors such as location, property condition, and market conditions to estimate the value of the property. Ultimately, the choice of method will depend on the specific property and the purpose of the valuation.
