1 Lot, 2 House, How do you figure ARV?

[Derek Zielinski]

Good Day Everyone! Hope all is well with you.

I have recently come across a property in my area that I believe has great potential. But I’m stuck trying to solve a numbers problem.

The property is listed and priced as a 3/2 SFH. The write up mentions a duplex in the rear of the property as well, but did not show pics, or have an info on it. My realtor believes the whole set up is an estate sale for an out of area owner.

So we did a walk through last week and was able to see the inside of both the SFH and the Duplex. The SFH does not need much to get up and running for tenants as it sits now. Mostly cosmetic and some minor rehab inside. It actually has the potential though, to be a duplex itself. If zoning/code in that city will allow for a basement conversion, it would make a 3/2 into a 3/1 over 2/1.

The duplex in the back of the lot is stacked 2/1 over 2/1, and will need significant repairs. It’s been sitting vacant for a good amount of time now. Complete overhaul inside, as well as a new roof, and some foundation work on one corner. Once finished, it would be like new. But if inspection goes sour, it could be a tear down. The realtor believes the duplex might have been an original carriage house from way back when, so it has good history. Be a shame to destroy that if it’s true.

My question is this: How would you figure out the ARV on this situation? On both: leaving the SFH as a 3/2 with a 4/2 duplex behind it. And/Or changing the SFH to a 5/2 duplex with a 4/2 duplex behind it.

Would you get the individual ARV for each house and add them together for the total? Or, combine all the rooms/bathrooms with the square footage of both buildings, and find similar sized, price per sqft home(s), recently sold in that market?

In other posts with similar questions, most investors say; find properties that are similar. But in my local market searches, I am coming up short on this type of property combination.

Thank you all for your time.