The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: TFTF on October 05, 2016, 04:15:51 PM
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Is there a rule of thumb for determining the relative value of an upstairs versus a downstairs unit in the same building? I am in the process of purchasing a duplex with a family member. We will hold title as a TIC and each have rights to one unit, and are trying to determine how to value the TIC shares. Assume equal square footage and general level of niceness.
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I have one duplex in a class C neighborhood. The upper unit rents for $300, the lower rents for $400. My side-by-side double rents for $500 a side.
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Upper units here are worth 10% more than lower units, as the lowers tend to be at least half in the ground, (steps down) and uppers only have 5-7 stairs to get up into, have the deck / views, and no noise from upstairs neighbors (kids! tap dancing kids!).
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In most areas it has more to do with sq ft. If both units are the exact sq feet and general level of niceness is the same I dont think it would matter.
The property will appraise by sq ft, renters will want to know how many bedrooms, bathrooms, kitchen, etc they will be getting (again with size), and you post it based on the size.
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Ease of access to common facilities such as laundry might factor in as well, or the unit's visibility of a common outside area.
For example, laundry in the basement and a patio would make the ground floor unit more valuable.
Views of water/mountains/anything scenic can make the top floor unit more valuable.
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My rental properties are valued differently than properties I flip or sell. The value of the upstairs & downstairs should follow with what the rent will be. For example if both rent for say $700, then they are equal. If one rents for $10 more then it should be valued more than the other.
Recently I got a low-ball offer on one of my properties. I had to think about it pretty hard before I realized that it was worth $255k to me due to the 1% rule with income of $2,550/month.
My concern with your original question is that you are purchasing a duplex with a family member.... It sounds like there will be emotional attachments and possible resentment if things are not divided evenly. Plus if you do divide things evenly there will always the the question if you ripped your partner off. There are too many emotions and unknowns in the question.
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Depends also on the weather. Upstairs is an over in summer in hot climates.