I want to sell a property with 2 houses on it.

The sales comparable approach in your situation is probably the best barometer of market value.  Since you said appraisal in your question I am assuming you had a professional appraiser ascertain value.  My short answer is this is the best approach.

The income approach is usually used for multi unit buildings with multiple income streams.  While income is considered, so is expense and reserves for future repairs.  Typically the appraiser assigns a time frame to painting interior/exterior, carpet/flooring replacement, furnace replacement, roof replacement, hot water heater replacement etc.  An estimated replacement value is a determined by the appraiser and spread over a period of years.  That time frame can be as short as 3 years.

The appraisal also assigns a value to lawn maintenance, snow removal, common area maintenance etc.  Future repairs is reflected as a reserve account on your balance sheet. Along with your taxes, insurance, water, sewer etc montly amount for reserves will reduce the rental income. Additionally the deduction to income will be made for other typical maintenance items on a pro-rated monthly basis.

While you may be doing those services yourself, the income approach views the unit as a stand alone profit center which must bear the total cost of operation. 

You can see that if the same approach was used for a building which contained 4 units under one roof,  the total cost of those line items would be less per unit.  The income approach may actually reduce your valuation and significantly lower the net profit. That's my long answer. 

Today in this economy many families are multi-generational.  Kids are moving back home or retired parents are moving in with children.  Your property can be marketed targeting those looking for multiple living spaces.  Not everyone wants to be a landlord so keep your marketing options open.

Good luck.

kjguth, If your intent is to sell the property, why not have a market analysis done to show you what amount a buyer will be willing to pay?  These are done by professional real estate agents.  They are free and very accurate. 


As Far as which approach for the rental, I'd think it would depend on the set up.  If the property is able to be sub divided with both homes having access to the main road without the need of an easement, the sales approach should be fine.  If not I'd go with the income approach.