Strange Zoning Issue, Waco TX

[Benjamin Bennett]

Greetings BP,

I have submitted an offer on a somewhat strange property. It is 2 SFRs and a garage apartment all on one lot. Fully leased with gross rents at $2000. As such, the seller is asking what would seem to be well below market value at $140k. After speaking with several lenders and professional surveyors I have discovered that these properties often sell for much less because:

1. Lenders are very hesitant to lend on properties for which no comps can be found, even if the property performs well. AND if you close on the property with cash, then replat (and/or divide the single lot into 2 lots), banks STILL often won't lend because the properties have 1 lien with what is now 2 lots.

2. Rezoning can be time consuming, expensive and sometimes impossible.

The interesting thing that my lender explained is that if I were to negotiate a much longer escrow with the seller, to allow time to replat BEFORE closing, then not only would I likely be able to refi as 2 separate lots, but it would also add significant value to the property.

This is all very new to me. Does anyone have experience replatting a strange property?