Two properties on One Parcel. Can I split?

[Michael West]

I'm in the process of buying a package of properties from a seller in Michigan and found this rather interesting situation...

There is a 1400sq ft Duplex and an 1100 sqft colonial (plus a garage) all located on ONE parcel of land. I'm buying them both and using a DSCR loan to pick them up as they are all occupied units. There are no comps that match this same description in the whole area. They are both in decent shape, but need a handful of items to get it to pass code and are a bit outdated cosmetically, so there is room for improvements and rent adjustment. I'm picking them up for $145k total.

So, we got the appraisal back and they ran all of the numbers as a TRIPLEX (which is one of the ways I also did it before buying) and it came in right at value. I know this is a non-conforming property and they were simply treating it as three units for comparison, and I don't disagree with that method. However, I know that if it were able to be comped separately as a Duplex and a SF, I would get values of approx. $120/$110 separately for a $230k total value (AS-IS).

Ideally I want to exit this loan as a BRRRR or possibly sell one of the two buildings separately.

Can I split the parcel to accommodate this concept? How do I go about doing it? Are there any issues that would arise with the lenders if I did so?

[Tanner Connelly]

You'd have to go to the city and see if they'd let you. We've done it before in Englewood, Colorado, and it was NOT a cheap process.