Cash Out Refi: Unique Property w/ Loan Issue

[Eric R. Dehner]

Hi All, 

The investment I'm looking to purchase has a single family home in the front (4 bd 2 bath) and a duplex (2 x 2bd 1 bath) in the back. Two buildings on one property. This type of property is unique to South Dakota. I just got off the phone with an appraiser based out of Sioux Falls who does appraisals around SE South Dakota. He said he's seen this type of property from time to time and every time the owner goes to get a loan on the property through conventional means (Fannie/Freddie) it's dead on arrival. He said it's nearly impossible to find a sale within the last 12 months on a property of similar specs (no comparables = no loan). In the end he's seen banks have to hold the loan in house because they were unable to sell it.

Is there a way around this issue?  Could the property be looked at as a triplex?  

Thanks,
Eric

[Mike Day]

Duplexes with detached third units cause problems due to an obscure rule. Your best bet will probably be to start calling local banks that do their loans in house and do not use Fannie Mae, aka portfolio lenders. It also might be eligible for FHA, though I'm not sure off the top of my head.