High cash flow no comps to justify value. Yucaipa CA

[Aron Persing]

Looking for refinance options.  

Last year I came across a unique property that I ended up purchasing. Its considered a triplex however there is 3 single family houses on the lot. In yucaipa California. My wife and i live in one of the houses and rent the other 2. Mix is: 4 bed 2 bath 2 car garage with private yard 1550 sq feet . 2 bed 1 bath 2 car garage with private yard 1000 sq feet and a 4 bed 2 bath 2 car garage with private yard 1800 sq feet all on about .7 acres. Total sq footage is 4350 across all houses. I purchased for 525k with 100k remodel budget target ARV of 750k. All 3 houses were vacant and not really liveable when buying, listed as a cash transaction. Comps when buying were very scarce for anything even close to a comparable. Crazy thing is i was able to buy FHA. Property had broken windows and missing windows (literally there was a sheet of plywood over one window), 1 houses had a huge missing section of shingles, all houses had peeling paint, duct taped linoleum floors, leaks under every sink etc etc. I was hoping to get a list of repairs to make prior to closing and they just said it was good to go. So at that point i felt really good about everything other than comps, but couldnt pass up the deal. In addition the houses are in a higher end single family zone. (North bench) This is grand fathered in as a triplex. Single family houses sell for 500-1.5mil in the surrounding area. I even tried to get the city to do a spot zone change, but i was denied. Appraised values would have been well over a million.

Fast forward to today. All houses have brand new hvac, new water lines to the street, new plumbing to the street, new flooring, new kitchens, interior/exterior paint, new bathrooms, 1 has new roof etc ect etc. Basically all new. I currently have a lease on my front house for $2150 per month and $1550 per month for my middle house. $3700. Covers my mortgage plus some.  Both of which are still lower than they could be. I iust rented my front house and had 82 tracked leads plus other phone calls. I think i should have rented for 2300-2500. But since i have plans to finish the landscaping and the yard is essentially just dirt still, i rented it for a bit lower.  If I were to rent my house, I have no doubt that I could rent it for $2500-2800. Total of $6200-6500 per month total.  Once i finalize things and "stabilize" better it should be close to $7000 gross.  Middle house was rented to a work associate of my wife and we were still doing lots of construction around the property. Market on that unit is 1700-1800.

I started to go down the refinance process and cant find comps that come anywhere close to what my property is. Other triplex properties with in 0-3miles tend to be a single building with a mix of 1 and 2 bedroom. Maybe an occasional 3 bed. And have 1500-2500 sq foot. With very small lots. Based on their sq footage and gross rents properties sell for 200-300 per foot. 400-500k. There are zero 3-4 unirs comps over 600k. In the 0-3 miles range.  I even went so far as to hire an appraiser to see what they could come up with. His value came in at 650k. He was giving 20k price bump between a 1 bed unit and a 4 bedroom house? And the difference of square feet of only $25-30 a foot? He said it was all "standards".  He said he tried to look at it as if a lender hired him. Said he spent 3 hours "banging his head on the keyboard" trying to find something he missed to come back with a higher value. He also wasn't giving a price bump for acreage, one property sat on only 7500 sq feet?  Our property is about 30,000.

The challenge i have, is that if you move this property about 5-8 miles the next town of redlands California 3 and 4 plex units with 60-65k gross yearly rents, sell for 800k.  If i were to move out and just rent my house this property would generate about 74k gross. So to me thats 850-900k in value.  If someone is looking to purchase an investment the cash flow can justify this value. 

So to circle back around, has any experienced anything similar where comps really dont exist but the cash flow from the property is high? What kind of options exist? My goal is to do a cash out refi with a loan balance of 600k. At an 80% ltv that only puts the value at 750k. This will eliminate my PMI and my payment should only go up a little bit. In the end I will still basically live for free and when i move out, that will be straight cash flow. However if i go down a traditional lender route, the appraiser that is hired will come back with give or take the same results based on the sales comparison approach.

Anyone have any thoughts.