Apartment complex appraisals are like no other. Rental homes and 2-4 family buildings are generally less challenging and the reports are often completed on standardized forms, but larger apartment complexes are usually completed as narrative reports.
Large complexes, at least those in my market are, usually have one to several building layouts that are built multiple times when the complex is constructed. A uniform design and similar construction materials are usually used when a complex is built. Large complexes fall within a few groups, with many falling within the 200 unit to 350 unit range.
While tenants don't pay a lot of attention consciously to the unit density, the appraisal considers an apartments floor area ratio. Generally, the greater the unit density is on a site the less pleasant it is to live there. Two-story buildings are the most popular with owners, since three-story buildings are more expensive to build given the requirements for elevators and sprinkler systems.
Apartment appraisals also consider; quality of construction, parking spaces per unit, common area buildings and amenities. Amenities can range significantly between one complex and the next. Pools, spas, tennis courts, parks, playgrounds, meeting rooms, recreation rooms and an array of other beneficial improvements are often built and must be considered. The services available to tenants are also important, especially when many tenants are elderly. The unit types located within an apartment complex are also an important consideration to the appraiser. A complex built with all 1 bedroom 1 bath units will have an entirely different community located within it, and income, than one competed with all 3 bedroom 2 bath units.
As all apartment appraisers know, the income and expense information available on a complex is extremely important to its valuation. While a sales approach and a cost approach to value are always considered, the income approach is often given considerable weight in the analysis. Appraisers must consider the actual rental income and determine whether or not the rates being charged are
reasonable in the market.
The research that is usually necessary to complete an apartment complex appraisal is more intense than that required for some other property types. Appraisers have to know market dynamics. They have to know details about comparable sales and comparable rental properties like rent concessions, finish quality and amenities that an exterior view of the complex is often not going to provide.
Apartment appraisals take appraisers significant time and effort to competently complete due in part to their size and to their complexity. Make sure that if you are new to this area that you correctly gage the time and effort that it will take to complete the report.
For more residential or commercial appraisal information contact Glenn Rigdon
, MA,MRICS, ASA a Las Vegas / Henderson Nevada appraiser via email or via his business website Horizon Village Appraisal
), or you can also click on “Contact Us” on the home page of this website.
Article source: http://www.appraisalarticles.com/General-Appraisal-Articles/2927-Apartment-Appraisals.html