Valuing East Lansing Rental Properties- By Curt Hanson, CSH Valuation Associates

The valuation of income units in the East Lansing student rental market is not unlike the valuation of other traditional income-producing units.  It just involves a greater understanding of the valuation measures and selection of the appropriate unit of comparison for the student rental market.  Professionals, Realtors and appraisers, versed in the nuances of this market should be sought for the knowledge and understanding of the income to the various housing units, and specifically how the relevance of location within the East Lansing student housing community, and the number of license allowed, relates to income to a particular unit or units. 

Income producing real estate is all granted a certain amount of licenses per unit, based on relevant criteria determined by the City of East Lansing.  The income to each rental unit is based on the amount of licenses that are available to each unit.  An appropriate unit of comparison for these properties, that can be derived and analyzed for use in valuation, includes the sales price per license measure.  For income analysis, rent per license and rent per bedroom amounts can be derived and used in the estimation of total market rent, which can then be multiplied by a gross monthly rent multiplier, or gross rent multiplier (annualized).

The importance of the knowledge in location factors figures into the proximity of the units to the campus and main downtown social area.  The highest rents are often seen, per license and per bedroom, nearest to Grand River Avenue.  A downtrend in rents can be seen just several blocks outward from the main locations off Grand River and across from campus, and going northeastward and westward.  An understanding of the many variables in the East Lansing student housing community is essential in both the sale of, and the valuation of these valuable parcels.  Turnover is very rare in the core initial blocks from the campus area and without the essential knowledge necessary in this community, valuation can be problematic.