Question:
“We have four units in Ocean Beach we want to sell. It’s a house plus a triplex in back. An agent calculated the value for us as four units, but shouldn’t the value be equal to the price of a house plus the price of a triplex added together?”
Answer:
I wish the answer was “yes,” but it isn’t. There are several reasons why:
- Most houses and most units in your area are on “full” 5,000 to 8,000 square feet lots. You have one such 7,000 sqft lot, so it’s not worth as much as properties on two 7,000 sqft lots.
- Even if you compared your property to a house and triplex each on 3,500 sqft lots, two 3,500 lots are worth more than one 7,000 sqft lot.
- Despite the convenience, most people don’t want to live next to their rentals. Much value of a owning a house is privacy and quiet enjoyment. However, if your three tenants are sharing the lot with you, you lose that.
- You may have seen “quiet single family neighborhood” in real estate ads. By definition, yours isn’t in such a neighborhood. You’ve heard the saying, “Location, location, location.” Streets zoned for single family are a more desirable location than those zoned for multiple units. There are many reasons, including that single family neighborhoods are less crowded, quieter, and better taken care of.
