Is this a Commercial or Residential property?

[Adam Vraa]

Hello BP, I’ve just started my investing journey (education phase) and one deal that I’ve come across has left me with a question that I can’t seem to find an answer for. It is possible that I’m just overlooking the obvious. So this deal is for 2 4-plex apartment buildings that aren’t connected, however they are identical and share a small parking lot. The owner is looking to sell them both, however he wouldn’t be opposed to only selling one. So my question is, if I purchase both buildings, would it be considered a commercial or residential deal? The main reason why I’m asking is to determine the best method to value the deal. NOI and Cap? or Comps? Thank you and any insight is greatly appreciated.

[Ryan D.]

Is each building on its own parcel, or both on one? It sounds like two parcels, two completely separate residential buildings- which is better for you. Residential financing terms are much better (30 yr amortisation, no balloon, lower interest rate).
I would pursue as two separate financed deals negotiated in the same purchase agreement (assuming state law permits this). Will most likely be based on comps (in my experience).