My Client owned 50% of alot of triplexes together with his father. Father passed away in 2023. Client got certified appraisals on these rental properties and I got to reading thru them.
My client did not keep these properties up. They are in need of major repairs. And thru the years, I would go thru each unit with my client and ask if so and so unit is rented out yet. He would say no. There are certain units that have not been rented out for 6-10 yrs now because they are unhabitable and need a lot of work. My client has no motivation to get these units back into shape to rent out.
So I read thru the appraisals and they have rental income on EVERY UNIT. Lets just say each unit is rented for 1,100 times 4 units for 12 months, then that would be 52,800 for the year on ALL 4 units. This client has only been renting 2 of the units for a long time. The other 2 are unhabitable as they need major work done.
so the appraisal calculates this monthly rental income by a Gross Rent Multiplier and comes up with an appraisal value and the notes do say this GRM rate was selected since the subject is a mid-life triplex with dated appeal and deferred maintenance. ok. ALSO the appraisal noted that this was a drive by appraisal.
I called the appraiser and asked him some questions. Of course, I asked if he walked inside all 4 units and he said no, he was asked to just do a drive by appraisal. I then pointed out about the monthly rent calculation on all 4 units when ONLY 2 are rentable and the other 2 are Unhabitable. I asked if that was the case, then would that change this appraisal value? He said yes.
Also that the monthly calculation should have been on ONLY the 2 UNITS that ARE actually rented out. (And I have many years tax returns showing that.)
That said, what do I do? In my clients file going back 10+ years I have notes about these specific triplexes, that he is only collecting rent on certain units. I ask him every year, is unit B and C rented yet? Same answer every year. Just haven't had time to deal with them. So My client is only collecting and has been only collecting rent on 2 units for many years now.
So again, my client owns 50% interest with his dad. HIs Dad died in 2023 and now he inherited his dads and gets step up in basis.
What do I do with these appraisals that might be over valued?
Of course my client wants the higher step up in basis, but as it is, he barely shows a profit between all his rentals.
What do I do? TIA
My client did not keep these properties up. They are in need of major repairs. And thru the years, I would go thru each unit with my client and ask if so and so unit is rented out yet. He would say no. There are certain units that have not been rented out for 6-10 yrs now because they are unhabitable and need a lot of work. My client has no motivation to get these units back into shape to rent out.
So I read thru the appraisals and they have rental income on EVERY UNIT. Lets just say each unit is rented for 1,100 times 4 units for 12 months, then that would be 52,800 for the year on ALL 4 units. This client has only been renting 2 of the units for a long time. The other 2 are unhabitable as they need major work done.
so the appraisal calculates this monthly rental income by a Gross Rent Multiplier and comes up with an appraisal value and the notes do say this GRM rate was selected since the subject is a mid-life triplex with dated appeal and deferred maintenance. ok. ALSO the appraisal noted that this was a drive by appraisal.
I called the appraiser and asked him some questions. Of course, I asked if he walked inside all 4 units and he said no, he was asked to just do a drive by appraisal. I then pointed out about the monthly rent calculation on all 4 units when ONLY 2 are rentable and the other 2 are Unhabitable. I asked if that was the case, then would that change this appraisal value? He said yes.
Also that the monthly calculation should have been on ONLY the 2 UNITS that ARE actually rented out. (And I have many years tax returns showing that.)
That said, what do I do? In my clients file going back 10+ years I have notes about these specific triplexes, that he is only collecting rent on certain units. I ask him every year, is unit B and C rented yet? Same answer every year. Just haven't had time to deal with them. So My client is only collecting and has been only collecting rent on 2 units for many years now.
So again, my client owns 50% interest with his dad. HIs Dad died in 2023 and now he inherited his dads and gets step up in basis.
What do I do with these appraisals that might be over valued?
Of course my client wants the higher step up in basis, but as it is, he barely shows a profit between all his rentals.
What do I do? TIA
Comment