A duplex, triplex or fourplex is appraised with two approaches and one legal question. The sales comparison approach, which values the property from closed sales of similar buildings, and the income approach, which values it from the rent the units can earn, are each developed and then reconciled into one opinion of market value. Before either one starts, the appraiser settles the legal use, the number of units and the kind of occupancy that zoning and permits allow, because that decides what is being valued.
This guide applies all three to the small income buildings around downtown Pomona, central Upland and Montclair. The rest of the series sits on the multi-family, 2-4 unit and market rent hub.
What counts as a 2-4 unit property
The first rulebook is the appraiser's license. The California Bureau of Real Estate Appraisers (BREA) states the scope of practice for a Certified Residential appraiser as "any 1-to-4 family residential properties regardless of the transaction value or complexity." Gordon Hall holds that license, BREA No. AR003877. BREA's license-level page gives the Certified General license "all types of real estate properties regardless of the transaction value or complexity," and BREA's Certified Residential page allows non-residential work only below a transaction-value limit. A building of five or more units is not a one-to-four-family residential property, so it sits outside that residential line. Where 2-4 units end and a commercial assignment begins takes that boundary apart using Montclair's small apartment buildings.
The second is the lender's form, and it drew the line in the same place. The legacy Form 1025, the Small Residential Income Property Appraisal Report (Freddie Mac Form 72), says it "is designed to report an appraisal of a two- to four-unit property," and its unit box offers exactly three choices: two, three or four. For Fannie Mae and Freddie Mac loans it is retired for reports submitted on or after November 2, 2026, but its boxes still show what the analysis covers.
A house with a back unit is not automatically a duplex. Fannie Mae's Selling Guide allows one accessory dwelling unit per parcel, does not allow one with a two- to four-unit dwelling, and says whether a property is a one-unit home with an ADU or a 2-4 unit property depends on characteristics such as separate utility meters, a unique postal address and whether the unit can be legally rented. The appraiser makes that call in the highest and best use analysis. How an ADU is appraised covers the one-unit side of that choice.
Legal use comes first
Legal use, the use that zoning and the permit record allow on that parcel, is the first fact the report establishes. Fannie Mae's Selling Guide requires the appraisal to say whether the use is legal conforming, legal nonconforming (grandfathered), illegal, or has no local zoning, as Form 1025's zoning box did, and for a legal nonconforming use the analysis must reflect any adverse effect on value and marketability.
That matters most in the older stock. Downtown Pomona, Holt Avenue and the streets toward the Fairplex hold duplexes built as duplexes, houses later divided into units, and lots with a front house and a rear unit; so do central Upland near Euclid Avenue and the blocks around the Montclair Transit Center. The county assessor's record of the building, a property-tax record and not an appraisal, often shows a different unit count from what stands on the lot.
The report keeps the records count, the on-site count and the permitted count apart, and states the legal count it relied on. If a unit cannot be supported as legal and the assignment still treats it as one, that is an extraordinary assumption, an assumption about uncertain facts that, if false, could change the result, and the report says so in plain words. When legal unit count differs from assessor records in Pomona shows how that is written.
The sales comparison approach on a small income building
The legacy Form 1025 sales grid showed how differently a small income building is compared. Each sale carries its price per unit, per room, per bedroom and per square foot of gross building area, plus its gross monthly rent and gross rent multiplier. Adjustments run for location, site, condition, age, parking and each unit's rooms, bedrooms and baths, and a row asks whether each comparable is subject to rent control.
Comparables come from the same kind of building nearby. A renovated fourplex near the Montclair Transit Center is not a fair stand-in for an unrenovated duplex across the 10. When a comparable has a different number of units from the subject, Freddie Mac's guidance for the redesigned report says to add a "Total Units" row and make the unit adjustment there, without adjusting the same unit features twice.
The county line adds a step. A Pomona duplex and an Ontario duplex can look alike yet sit under different assessors, city rules and buyer pools, so a sale from across the line is used only with the reason explained. The Pomona area page describes how that edge behaves.
The income approach, the gross rent multiplier and market rent
On a 2-4 unit lender report, the income approach is usually built on a gross rent multiplier, the ratio of a comparable building's sale price to its gross monthly rent. Form 1025 stated the calculation directly: total gross monthly rent times the gross rent multiplier gives the indicated value by the income approach, with a comment reconciling how the multiplier was chosen. A capitalization rate, the relationship between a year's net operating income and value, belongs to a fuller income analysis and is more common on larger buildings than on a fourplex report.
The rent in that calculation is market rent, the rent a unit would most likely command if offered for lease on the effective date, which is different from contract rent, the rent written in the current tenant's lease. The Form 1025 rent schedule showed both side by side: each unit's lease begin and end dates and actual rent, then the appraiser's opinion of market rent for each unit, and the utilities the rent includes. The comparable rentals are, in the form's own words, "the most current, similar, and proximate."
Rent evidence comes from signed leases, not listing asks. Below-market rents are reported as they are. A long-held tenant near the Claremont Colleges or in central Pomona may pay under what a new lease would bring, and the report explains which rent the income analysis used. Vacancy and collection loss, the income a building loses to empty units and unpaid rent, is part of that discussion whenever net income is developed. The Form 1007 rent schedule explainer covers the one-unit version of the same rent analysis, and a standalone market rent analysis is available to owners setting rents.
Reconciling the two into one opinion
The Form 1025 certification stated that the opinion of market value is based on the sales comparison and income approaches, and that the cost approach was considered but not developed unless the report says otherwise. Reconciliation weighs the two indications in writing: the strength of the sales, the strength of the rent evidence, and which one buyers of this kind of building rely on. The opinion applies as of the effective date. The three approaches to value explains each method on its own.
Nothing starts from a target. The appraiser is independent of every party, including the one who pays. The fee is set by the scope of the assignment and quoted before work begins, and fees do not depend on the value.
The redesigned report and the old form numbers
Freddie Mac's redesign FAQ lists the Small Residential Income Property Appraisal Report (1025/72) and the Single-Family Comparable Rent Schedule (1007/1000) among the forms replaced by one redesigned Uniform Residential Appraisal Report, and says the new format is mandatory for new reports submitted to the Uniform Collateral Data Portal on or after November 2, 2026. Market rent moves into its Rental Information section. A lender that cannot meet the mandate must request a policy exception from each GSE, and FHA, VA and USDA set their own plans. What the redesigned URAR changes covers the transition.
What an owner gathers, and how the inspection runs
- Current leases or a rent roll, with move-in dates and the utilities each tenant pays.
- Operating expenses, if the assignment calls for them.
- Permits, final sign-offs and any city letter about the unit count or a conversion.
- Access to every unit, with tenant notice arranged by the owner. Scheduling an inspection with tenants in place explains how that works.
The Form 1025 certification stated a complete interior and exterior inspection, including all units. The inspection is 30 to 60 minutes for a standard single-family home, longer for hillside, custom, multi-family or homes with additions. Reports are typically delivered three to five business days from the inspection.
Who reads the report
Every report states its intended use, what the report will be used for, and its intended users, the people entitled to rely on it. On a loan, Form 1025 named the lender/client as the intended user. Owners, 1031 exchange buyers, trustees and heirs order these reports for their own uses, and the scope changes with each. Where a rent rule limits what a current tenant pays, the report notes it as a condition affecting income; it is not legal advice on rent law.
To scope a duplex, triplex or fourplex, send the address, the unit count and the rent roll through the multi-family and 2-4 unit appraisal page, or call (909) 324-6122.
Sources
- California Bureau of Real Estate Appraisers, Become a Certified Residential Appraiser (scope of practice), accessed November 6, 2026
- California Bureau of Real Estate Appraisers, Real Estate Appraiser License Levels, accessed November 6, 2026
- California Bureau of Real Estate Appraisers, license lookup for Gordon Hall, AR003877, accessed November 6, 2026
- Freddie Mac Form 72 / Fannie Mae Form 1025, Small Residential Income Property Appraisal Report (March 2005, legacy form), accessed November 6, 2026
- Fannie Mae Selling Guide B4-1.2-01, Appraisal Report Forms and Exhibits, accessed November 6, 2026
- Fannie Mae Selling Guide B2-3-04, Special Property Eligibility Considerations (accessory dwelling units), accessed November 6, 2026
- Fannie Mae Selling Guide B4-1.3-04, Site Section of the Appraisal Report (zoning and highest and best use), accessed November 6, 2026
- Freddie Mac, UAD and Forms Redesign FAQs, accessed November 6, 2026
- The Appraisal Foundation, Uniform Standards of Professional Appraisal Practice (USPAP), accessed November 6, 2026
Gordon Hall, California Certified Residential Real Estate Appraiser, BREA No. AR003877 (lookup: https://www2.brea.ca.gov/breasearch/faces/party/view.xhtml?id=23601). Reports are prepared in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP). Nothing here is legal or tax advice; admissibility is always the court's decision.
Frequently asked questions
How is a duplex, triplex or fourplex appraised?
The appraiser first establishes the legal use and the legal unit count, then develops the sales comparison approach from closed sales of similar small income buildings and the income approach from the rent the units can earn, usually through a gross rent multiplier. The two indications are reconciled in writing into one opinion of market value as of the effective date.
Can a Certified Residential appraiser appraise a five-unit building?
BREA states the Certified Residential scope as any one-to-four-family residential property regardless of transaction value or complexity, and gives the Certified General license all property types without a value or complexity limit. A building of five or more units is outside that one-to-four-family line; BREA allows Certified Residential non-residential work only below a transaction-value limit it states.
Is market rent taken from leases or from listings?
From leases wherever they can be verified. An asking rent is what a landlord hopes for; a signed lease is what a tenant agreed to pay. The rent schedule on a 2-4 unit report shows each unit's current contract rent next to the appraiser's opinion of market rent.
What if the building has more units than the records show?
The report states the legal unit count it relied on, based on permits and city records, and describes what is on site. Any unit the report cannot support as legal is described as found, and if the analysis treats it as legal anyway, that is stated as an extraordinary assumption.
