Apartment Appraisals: Frequently Asked Questions

What information and exhibits are required to prepare an apartment appraisal?

To deliver an accurate valuation, apartment appraisers analyze your property the same way a prospective investor would. We typically require:

• A current rent roll as of the valuation date.

• Income and expense statements covering year-to-date figures plus the two prior full years.

We pay close attention to your utilities, insurance, and maintenance costs. Please note that appraisers are required to use stabilized expenses—meaning we look at typical, long-term market averages (assuming third-party professional management) rather than a single year's unusually high or low expenses.

What information should be included on my apartment rent roll?

A comprehensive rent roll should clearly detail:

• Unit numbers

• Unit configurations (number of bedrooms and bathrooms)

• Approximate square footage per unit

• Current contract rental rates

• Lease start and termination dates

Pro Tip: We highly encourage asset managers to also include the "probable rent on turnover" (market rent) for each unit.

What information should be included on my apartment expense statement?

If your property is professionally managed, your property manager can easily export this report. Your expense statement should break down:

• Property taxes and insurance

• Utilities (water, sewer, trash, electric)

• Operational costs (maintenance, landscaping, pest control)

• Property management fees and replacement reserves

Note: If you manage the property yourself, you can often find these figures aggregated on Schedule E of your tax returns.

What other information will help facilitate the appraisal process?

Providing a building plan with an accurate accounting of each unit's square footage is highly recommended. If you aren't completely certain of the exact sizes, obtaining a clear picture of unit and common-area square footage is critical.

Inaccurate square footage can lead to undercharging or overcharging for rent. Because of California's AB-1482 Tenant Protection Act of 2019, entering into a lease with an incorrect unit size or configuration locks you into that agreement. You will only be legally allowed to raise rents based on local CPI plus 5% from that baseline.

How many units will the appraiser need to see during the inspection?

The depth of the inspection depends entirely on who will be using the appraisal:

• Lenders and Banks: Institutional users usually have strict guidelines requiring the appraiser to inspect a sample of each floor plan, alongside all common areas.

• Personal or Administrative Use: If the report is just for your own records, an interior inspection may not be necessary. We can perform an exterior-only appraisal by making an extraordinary assumption about the units' condition (e.g., assuming they are in average, renovated, or inferior condition).

Whenever we make this assumption, appraisal standards require us to prominently disclose it throughout the report—including the transmittal letter, property description, valuation sections, and limiting conditions—to ensure complete transparency for the end user.

How long will the property inspection take?

We keep interior inspections as brief and non-intrusive for your tenants as possible. For each unit, the appraiser will take quick photos and verify the basic dimensions, which typically takes an experienced appraiser less than 10 minutes per unit.

For a standard 6-to-10-unit building, the appraiser will spend an additional 30 minutes documenting the exterior, common areas, garages, parking layouts, and surrounding streets. The property contact does not need to stay for the exterior portion, but on-site management and tenants should be notified of our presence.

What happens if the appraisal value comes in lower than I expected?

If the final valuation is unexpected or lower than what you or your realtor anticipated, you should absolutely feel comfortable discussing it with your appraiser. A reputable appraiser welcomes review questions and will gladly explain their rationale. If you have additional market data, recent neighborhood sales, or property details you believe were overlooked, our office will gladly review and consider them.

What critical market trends should San Diego apartment owners watch right now?

The multi-family landscape is shifting quickly. Owners should stay vigilant in three key areas:

1. Local Rent Control & Eviction Laws: While pandemic-era moratoriums have expired, local municipalities are increasingly passing their own strict regulations to prevent no-fault evictions. For example, Chula Vista was among the first in San Diego County to implement localized residential rental rules, and the rest of the county is expected to follow suit as housing scarcity persists.

1. Rent Trailing: Because base rents lock in under state rent control, missing the market rate on a new lease can leave your asset trailing fair market value for years. Ten years ago, rental growth was slower and legal limits were higher, so monitoring market variance wasn't as critical. Today, because market rent spikes often exceed CPI plus 5%, knowing your neighborhood's true asking rents is vital.

1. Utility Surges: We are seeing an influx of aberrantly high utility invoices submitted by owners. This includes electric spikes from SDG&E (often tied to recent rate hikes and peak usage hours) and water bill anomalies from the City of San Diego Public Utilities Department (frequently caused by malfunctioning meters or delayed invoicing). Monitor these monthly; if you wait until your annual review, it may be too late to dispute the charges.

How does the San Diego County Assessor’s office estimate apartment values?

When a property transfers, the Assessor’s office starts with the recorded sales price and the disclosures filed at purchase. However, they also run independent cash flow projections to determine fair market value. If they suspect a price was artificially inflated or deflated, they will adjust the assessed value to match market probability.

Historically, the Assessor assumed all units were commanding full market rent and offered no relief for below-market contract rents (adverse leaseholds). However, because statewide rent control now legally limits an owner's ability to raise rents to market levels, the Assessor's office is facing pressure to adjust this policy to reflect the true regulatory restrictions on an asset's income.

When are San Diego apartment owners required to have an on-site manager?

Under California law, if your apartment building has 16 or more units tied to a single Assessor’s Parcel Number (APN), you are legally required to have a responsible person (such as an on-site manager) residing on the property.