I'm doing a true triplex in downtown Newnan of which one unit is owner occupied. I've never run into this before and wanted to make sure I handled it correctly. Am I correct in thinking that the third owner occupied unit is considered rental income? My apologies if this is a stupid question.

Actually, I meant to ask..Do I treat this any differently than I would if it were not owner occupied?

Treat that unit as producing income as well.
Obviously you will estimate it's rent since it is owner occupied and state that in report.

Thank you for your input.

Make sure you know whether you've been asked to provide a value in the fee simple estate or in the leased fee estate.
FHA has specific guidelines- this assignment would fall on the latter.

If the value sought is in fee simple, you would use all market rents.

If you are valuing the leased fee, use actual rents.

Owner oppu- per your 216/OIS you will note that you can not count owner oppu rents.

If you provide an income production property then I would ask the client if they want a 216 and note that.

Income production must be tracked and noted with investment type properties and duplexs, triplexs and quads.

good luck

Rusty

This is a nightmare. Is it ever possible that the estimate of value from the Income Approach be a better indicator of value for the subject? In other words, at the bottom of the sales grid on page 3, it gives a value per unit, per room, etc. These numbers seem to be the best indicator of value for the subject property but they don't coincide with the adjusted sales prices of the comparable sales. There are no similar comparable sales that reflect the size or condition of this triplex!

On an income property, the Income Approach is probably the most reliable indication of value.

On a single family property used as
income producing:
216 Operating Income Statement
1007 Rent Schedule


On Duplex, Quads and Tris:
1025 Small Income Property form
a rent schedule should not be requested,
however, there are times when that happens.
The form already has accomodations for
such.

Anything over four units is considered commercial property.

Julie,

If you have trouble, call me.

Anna
404-285-6321

Thanks Anna. I think I've stared at it long enough that it is making sense to me. I've done tons of multi-family properties but none where there were absolutely no comps that give a good indication of value. I'll keep your number though. I've found great insight in reading your posts. Thanks again.

You have to remember, and never lose sight of the fact that for an income producing property, that is designed that way(ie a non single family unit), the only thing an investor cares about is what sort of income stream a property is going to provide, how much in, how much out and how much profit. So in many cases the income approach is the best approach. The sales comparison is secondary and usually helps prove the income approach, as your GRM is derived from the sales of similar type properties.

It's like a being in a classroom on this post. It's just a wonderful resource. Thanks Marcus and Julie.