PART 2: HOW VALUING METHODOLOGY DIFFERS FOR HOUSES WITH CO-LIVING SPACES, ROOMING HOMES AND MICRO-APARTMENTS

Valuing properties with co-living spaces, rooming homes, and micro-apartments involves distinct methodologies compared to traditional residential properties. Here’s an overview of how the valuation methodologies differ for these types of properties:


1. Income Approach

  • Co-Living Spaces: The income approach is particularly relevant for co-living properties, as they often operate as rental businesses. Valuers assess potential rental income from individual rooms and shared spaces, factoring in occupancy rates and rental demand. The calculation includes gross rental income, operating expenses, and a capitalization rate to determine the property's value.


  • Rooming Homes: Similar to co-living spaces, rooming homes are valued based on their income-generating potential. Valuers analyze the rental income from individual rooms, considering the average rent per room and occupancy levels. The income approach helps to reflect the property's ability to generate cash flow.


  • Micro-Apartments: For micro-apartments, the income approach also applies, but valuers must consider the unique rental dynamics of smaller units. They evaluate the rental rates for micro-apartments in the area, taking into account the demand for compact living spaces and the potential for higher rents per square meter.


2. Comparative Market Analysis (CMA)

  • Co-Living Spaces: When using CMA for co-living properties, valuers compare similar co-living developments in the area. They look for properties with comparable amenities, room configurations, and community features. The analysis focuses on rental rates and occupancy levels of similar co-living spaces.


  • Rooming Homes: Valuers conducting a CMA for rooming homes compare them to other rooming houses or shared accommodation options. They assess factors such as location, room sizes, and shared facilities to determine a fair market value.

  • Micro-Apartments: For micro-apartments, the CMA involves comparing them to other micro-units or small apartments in the vicinity. Valuers consider the size, layout, and amenities of comparable properties to establish a market value.


3. Cost Approach

  • Co-Living Spaces: The cost approach may be used for newly developed co-living spaces, where valuers estimate the cost to construct the property, including land acquisition, construction costs, and amenities. They then subtract depreciation to arrive at a value.


  • Rooming Homes: For rooming homes, the cost approach can also be relevant, especially for properties that have undergone significant renovations or improvements. Valuers assess the cost of replacing or reproducing the property while considering its current condition.


  • Micro-Apartments: The cost approach for micro-apartments involves estimating the cost to build or renovate the units, factoring in the unique design and space-saving features. This method is particularly useful for new developments or properties with specialized layouts.


4. Market Trends and Demand Analysis

  • Co-Living Spaces: Valuers must consider current trends in co-living, such as the demand for community-oriented living and flexible lease terms. Understanding the target demographic and their preferences is crucial for accurate valuation.

  • Rooming Homes: The demand for affordable housing options influences the valuation of rooming homes. Valuers analyze local market conditions, including rental demand and competition from other housing types.


  • Micro-Apartments: The growing trend of urbanization and the demand for affordable housing in city centers impact the valuation of micro-apartments. Valuers assess market trends related to compact living and the appeal of micro-units to young professionals and students.


Conclusion

Valuing properties with co-living spaces, rooming homes, and micro-apartments requires a tailored approach that considers their unique characteristics and income-generating potential. By employing appropriate valuation methodologies and staying informed about market trends, valuers can provide accurate assessments that reflect the true value of these innovative housing solutions.