Multi-Family (2-4 Unit)

2-4 unit residential income properties are appraised under residential standards (Form 1025) using both the sales comparison approach and the income approach. The income approach uses gross rent multipliers (GRM) and market rent analysis to derive an income-based value. Both approaches are reconciled to a final value. This dual-approach methodology is more rigorous than single-family appraisal.

2-4 unit properties are eligible for residential mortgage programs (Fannie Mae, Freddie Mac, FHA, VA) because they’re considered residential income properties — the buyer either lives in one unit (owner-occupied) or holds for investment. The 5+ unit threshold triggers commercial financing requirements. This residential treatment makes 2-4 unit properties popular entry points for real estate investors.

Yes. Conventional, FHA, and VA loans allow rental income from non-owner-occupied units to count toward qualification, typically at 75% of market rent (the 25% haircut accounts for vacancy and expenses). The appraisal includes a market rent analysis that the lender uses for income calculation. Market rent vs in-place rent matters — lower of the two often controls.

FHA and conventional financing both allow 2-4 unit owner-occupied purchase. FHA permits as little as 3.5% down for owner-occupied 2-4 units, making this one of the most accessible paths to small multifamily ownership. You must occupy one unit as your primary residence. Our appraisals support these owner-occupied purchase and refinance transactions throughout LA County.

Many older LA multifamily properties have unpermitted units, garage conversions, or non-conforming additions. We document what we observe and explain the legal vs as-built configuration. Value contributions for unpermitted units depend on lender policy and market acceptance. Reports document everything transparently so the lender can underwrite based on the actual property characteristics.