Overview
Multi unit residential properties such as duplexes, triplexes and fourplexes require a different valuation approach than single family homes.
These properties produce income, involve multiple tenants and often carry higher operational risk.
Appraisers evaluate them using both the sales comparison approach and the income approach to ensure the valuation aligns with investor behaviour and lender expectations.
This guide explains how multi unit properties are valued, what factors matter most and how lenders interpret these valuations across the GTA and surrounding areas.
Multi unit valuation affects:
• Investor purchase decisions
• Refinancing outcomes
• Cap rate analysis
• Net operating income
• Borrowing power
• Lender risk assessment
• Long term investment planning
Because income and risk vary between units, understanding how these properties are evaluated prevents surprises and helps investors interpret their appraisal correctly.
Multi unit properties require a blend of two valuation approaches:
- Sales Comparison Approach
Appraisers compare the subject to other multi unit properties sold recently.
They look for:
• Number of units
• Legal status
• Location
• Rental performance
• Condition
• Unit configuration
Because multi units sell less frequently, older or slightly farther sales are sometimes necessary.
- Income Approach
Income driven valuation is central to multi unit analysis.
Formula:
Value = Net Operating Income / Cap Rate
Appraisers evaluate:
• Gross rent
• Market rent potential
• Vacancy assumptions
• Operating expenses
• Typical cap rates
• Rental stability
The income approach ensures the property’s performance supports its market value.
Key Factors That Influence Multi Unit Valuation
Lenders review:
• Income stability
• Legal status of units
• Operating expenses
• Cap rate selection
• Vacancy assumptions
• Market rent estimates
• Comparable sale quality
Lenders are cautious with multi unit properties and often use the income approach to verify if the sales approach is reasonable.
Common Misunderstandings
“A duplex is worth double a single family home.”
Not true. Value is based on income, condition and comparable sales, not the number of kitchens or units.
“Rental income always increases value.”
Only if it aligns with market cap rates and tenant stability.
“Multi unit properties always qualify for more financing.”
Not if income is weak or units are not legal.
“Cap rates are the same across the GTA.”
Cap rates vary significantly between neighbourhoods.
Do appraisers count basement units?
Only if legal or if the income is recognized by the market and lender.
Does actual rent or market rent matter more?
Market rent usually matters more for valuation.
Is the income approach always used?
For multi unit properties, yes. It is essential.
Do lenders ignore illegal units?
Often yes. They may exclude income or reduce the loan amount.
If you want a clear breakdown of how your duplex, triplex or multi unit property will be valued, our appraisal team can walk you through the income, expense and comparable data shaping today’s investor market.
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