micmaher99 t1_ja9cl6a wrote
Reply to comment by bodhipooh in Anyone else get a 'Chapter 91' notice from the city assessor demanding rent & expense info on income property? by Blecher_onthe_Hudson
Cash flow is the main determination of market value for most commercial real estate. For 4 unit multifamily and smaller properties, you usually do a sales approach and an income approach. For single family homes or condos, you do a sales comparison approach, but that reflects that some people will buy these and rent them out.
Cash flow is 100% a great indication of market value.
bodhipooh t1_jaccva9 wrote
>Cash flow is the main determination of market value for most commercial real estate
OP is in residential real estate, not commercial real estate. Though, your 4-unit example is obviously very much on point and something I had not considered. Those types of properties are obviously meant as rental businesses, but they are still considered residential real estate, no? Ultimately, the landlord is getting taxed on rental business income, so I am still not understanding why the city needs all that accounting information.
micmaher99 t1_jacgviq wrote
>OP is in residential real estate, not commercial real estate
OP has owned "rentals for decades.". Based on that, plus the fact JC is asking OP for property financials, I'm assuming OP doesn't just own a random condo or two.
4 unit multifamily is really where banks and the industry make the switch in talking about "residential" vs "commercial", but with multi-million dollar companies buying up single family homes to rent them out, that line has gotten blurry. It's really a difference without a distinction for OP.
The city wants accounting info to sharpen their income approach value to ensure the property tax assessment is correct. Yes, real estate that is rented for income pays property taxes, even though the landlord gets taxed on that income.
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