A financial institution’s assessment of a multi-unit residential property serves to evaluate its financial viability and physical condition. This process typically involves a review of the property’s income and expenses, occupancy rates, and a physical examination to identify any deferred maintenance or potential structural issues. As an example, a lender might require such an evaluation before approving a mortgage for a building containing numerous residences.
This evaluation is crucial for several reasons. For the lending institution, it mitigates risk by ensuring the property can generate sufficient income to cover debt service and maintain its value. For potential buyers, it provides valuable insights into the building’s overall health and potential future costs. Historically, these assessments have evolved from simple appraisals focused solely on market value to more comprehensive due diligence processes incorporating financial and physical assessments.
