I have a quick question for you.
I am doing an appraisal on an older 2-story home. The original kitchen is located on the first floor. Although the kitchen on the first floor is fully functional, the owners have done quite a bit of remodeling lately which includes installing another more elaborate kitchen on the second floor in the vicinity of a large family room. The location of this kitchen is really more ideal than the original kitchen, since it is located towards the rear of the home and has an unobstructed view of the water. There are two separate staircases leading to the second floor. I was considering allowing the newer, updated kitchen to represent the main kitchen and possibly give minimum credit for the older kitchen on the 1st floor. Hope I haven't confused things much but just wanted to run that by you. As far as resale goes, I think the newer, updated kitchen would be a strong selling point. I'm just trying to figure out the proper direction to take in the appraisal to avoid underwriter issues.
Powell's Appraisal Services, Inc
Many houses have second kitchens. However, you have to be careful about 2nd kitchens on the upper floors as many zoning regulations would consider this to be a conversion to a two family house. You need to check with your building inspector to find out what applies in the subject community.
I cannot make a judgment about a house I have never seen. Generally, you have to decide how much extra value this second kitchen adds, keeping in mind that it might be an over-improvement and suffer from some functional obsolescence.
Great Mag & Blog. Thanks for your hard work.
Let me ask you, do you calculate vacancy based on a time period or unit basis for muti-family/commercial properties. I have a 20 unit mixed use building, with 3 retail spaces and 17 apartments. One of my retail spaces and 2 apartments are vacant going on 3 months now. So is my vacancy rate 6.6% or 24.9%?
G James Gervas
Thanks for your kind words.
Normally vacancy rates are reported on an annual basis. It is not based on your current rate but rather on an historical fact. It is like the income and expense statement where you are forecasting a typical year, rather than reporting a "blip". Most likely it will not be either of the figures you are suggesting, but rather, a composite of the past years average vacancies. For example, if your monthly vacancy rate is approximately 24.9% of the total space, for 3 months, but nil for the rest of the year, the vacancy rate would be 6.2% for the past year. (24.9% x 3 months = 74.7 + 0 divided by 12 months = .0622). However, you should be considering more than a single previous year.