Property Tax Appeal for Duplexes and Small Multifamily (2-4 Units)
TL;DR
Duplexes and small multifamily properties are valued using both comparable sales and income approaches. If the assessor overestimates rental income, underestimates expenses, or uses comparable sales of larger buildings, your assessment may be inflated. Find sales of similar 2-4 unit properties and calculate the income approach value using actual local rents. The lower of the two methods often provides your strongest argument.
Valuation Methods for Small Multifamily
Assessors may use either comparable sales or income approach for 2-4 unit properties. You can argue whichever method produces a lower value.
Comparable Sales Approach
Find sales of similar duplexes or small multifamily properties. Match on unit count, total square footage, age, and condition. Do not compare a duplex to a single-family home or a 10-unit apartment building.
Income Approach
Calculate the gross rental income using actual local market rents (not optimistic projections). Subtract vacancy (5-10%), operating expenses (taxes, insurance, maintenance, management), and apply a market capitalization rate. If the result is lower than the assessment, present this calculation.
| Income Approach Component | How to Document |
|---|---|
| Market rent per unit | Comparable rental listings, actual lease agreements |
| Vacancy rate | Local vacancy data, your actual vacancy history |
| Operating expenses | Your actual expenses or industry standards (35-45% of gross income) |
| Capitalization rate | Recent multifamily sales in your area (sale price / NOI) |
Frequently Asked Questions
What should I know about tl;dr?
Duplexes and small multifamily properties are valued using both comparable sales and income approaches. If the assessor overestimates rental income, underestimates expenses, or uses comparable sales of larger buildings, your assessment may be inflated. Find sales of similar 2-4 unit properties and calculate the income approach value using actual local rents.
What should I know about comparable sales approach?
Find sales of similar duplexes or small multifamily properties. Match on unit count, total square footage, age, and condition. Do not compare a duplex to a single-family home or a 10-unit apartment building.
What should I know about income approach?
Calculate the gross rental income using actual local market rents (not optimistic projections). Subtract vacancy (5-10%), operating expenses (taxes, insurance, maintenance, management), and apply a market capitalization rate. If the result is lower than the assessment, present this calculation.
What should I know about get your evidence packet?
Our $79 Evidence Packet provides comparable sales analysis tailored to your property type. Start with our free quiz to see your savings potential.
Get Your Evidence Packet
Our $79 Evidence Packet provides comparable sales analysis tailored to your property type. Start with our free quiz to see your savings potential.