Rental and multi-unit property appraisers in Canada
A rental property appraisal values a home that earns rent, a house with a secondary suite, a duplex, triplex or fourplex, or a larger apartment building. For small rentals, value still follows comparable sales; as the number of units rises, it follows the income more and more.
The appraisers listed here value investment and income properties for owners, buyers and lenders across Canada.
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A single-family rental or a condo held as an investment is usually appraised like any other home, by direct comparison with sales of similar properties. The rent is relevant but does not normally drive the value, because most buyers of that type of property are owner-occupiers.
A duplex to fourplex sits in between. The appraiser compares sales of similar small multiplexes and often adds an income analysis using a gross rent multiplier, since buyers of these properties are frequently investors comparing rents.
Multi-unit appraisal above four units
Once a building has more units than residential lending covers, it is generally financed and appraised as commercial property. Value follows net operating income, and the appraisal needs a rent roll, lease terms, operating expenses and vacancy history. The report is prepared by a commercial appraiser.
In the Appraisal Institute of Canada’s system, residential designations cover dwellings of up to four units; larger buildings are AACI work. Confirm the designation of anyone you hire with the professional body directly.
Income property appraisal for financing
Lenders ask the appraiser for market rent as well as market value. The market rent figure is what many lenders use in their own rental income calculations, so a suite rented well below market can hold back what you can borrow, and a suite without permits may be given no rental value at all.
Legal status matters to the value as well as to the lender. A secondary suite that meets local zoning and building rules is worth more than one that does not, and the appraiser will say which one they found.
Common questions
How is a rental property appraised?
Small rentals are appraised mainly by comparison with sales of similar properties. As the number of units increases, the appraiser relies more on the income approach, market rents, vacancy and expenses converted into a value.
Does rent affect an appraisal?
For a single-family home, only modestly. For a multiplex it matters more, and for a building above four units it is the main driver of value. Lenders also ask for a market rent figure, which can affect what they will lend.
What documents do I need for a multi-unit appraisal?
A current rent roll, copies of leases, a statement of operating expenses, any recent capital work with dates, and permits for any added units. The appraiser will also need access to a representative sample of the units.
Is a duplex appraised as residential or commercial?
Residential. Duplexes, triplexes and fourplexes are appraised as residential property, usually by comparison with sales of similar multiplexes and often with a gross rent multiplier as a cross-check.