I currently have a lead that I am working on. There are two properties on one lot. The main property is a 2bd, 1ba and the other house is a 1 bd 1 ba. The owner got the property from a tax sale. The owner stated that she had to purchase both the properties together. She decided not to flip it because she realized that the smaller property was not wired for electricity and did not have its own sewer or water wich was run from the main house. I’m really not sure what to look at for comps since this property has 2 houses on one lot. The arv for the main house is around $40k and needs 15k in repairs. The second house needs about 10 in repairs. The seller was asking $26k but went down to $23k because there are two houses. So what should I be looking at for comps? Any advice is appreciated.
I would view this as a 2bd/1ba house with an outbuilding (like a shed) on the property. Based on what you’re saying, the second house is uninhabitable so I wouldn’t place much value on that at all. I actually own a property almost identical to what you’re describing, but both units were functional when I purchased them. I pay the water/sewer/trash there because they are not separately metered. It could be pretty costly to wire that other house and you said it needs other repairs, so that’s why I wouldn’t give it much value. It’s a storage building until you finish it out.
Just my opinion.
Justin0419, thank you very much for responding. That’s along the lines of what I was thinking as well. So I should be looking at comps with 2bd 1ba, and not counting the smaller house. Now I just have to explain to the seller that the other does’nt count much because it is uninhabitable and needs lots of work. It may even be worth it for the end buyer to just tear it down. Thanks again for your input.
Yes, I would try to nail down what the 2br house is really worth in that area and in that condition. There’s potential here for the smaller house and another investor can force appreciation on this property by fixing that up too, but you don’t want to pay too much extra for a structure that’s going to take that much work to be rentable.
Here’s the numbers on my deal that looks like this:
Purchase price - 17k
2/1 rent - 400/mo
1/1 rent - 325/mo
water/sewer/trash bill - about $90/mo
The 2/1 needed a few thousand of work. The 1/1 needs updating, but it’s nothing so bad that I’m going to worry about it right now since we inherited a tenant in that one too.