MY FIRST MULTI-FAMILY BRRRR IN NJ - Need Advice!!

[David Kasneci]

Hello everyone my name is David Kasneci.

I bought a 2 Family house in a town I see potential in. Once I saw the home I figured a way to live in one unit while renting out the other two. 3 Kitchens, 1 Bath in each unit, my unit is 1 bedroom, second unit is 5 bedrooms, and the third is 2 bedrooms. I purchased it with a 5% down FHA 30 year fixed loan with my interest rate only being 3%. Great deal, but the only reason I got this price is because of what the appraisal came back at. The past year alone there have only been 2 Multi-Family units sell in Hackettstown. I am just not too sure how the appraisal came back so low? I was happy considering the numbers would make sense after looking at what the rents pay. With down payment and closing costs, I closed with using $25,000 of my own money. My rehab was 15,000, my ROI sits at 28% while living in one unit for free. Once I rent out my unit and move, my ROI would sit at 53%. I think I got a good deal.

I want to add another full bath in the house, force appreciation. I believe that my rehab definitely forced appreciation on the home as is, as well as switching the house to all natural gas, and even going through the Variance of making this two unit a legal three unit But my plan is to do a BRRRR.

My question now... Considering there really are no recent comps in the area, also it is legally a 2 family home, so I can't show my $2,000 that my tenants in the (third unit) bring me.. how will I know that my ARV is, or what my appraisal will come back at, once I do decide to refi? Do I need to go through the Variance of making it a 3 family to get what I really want?

I would really appreciate some advice and input! This is very exciting for me, and its a pleasure having the gift to learn from Bigger Pockets!!