Convert two Triplexs on Separate Tax Parcels to Commercial Prop

[Ryan Judah]

Hey BP Members -

I am looking at tax parcel 1 and tax parcel 2 which are on the same acre of land. It’s two triplexes, each consisting of (3) 2x1’s. They are listed for $480k and $485k. I'm wondering if I can increase the value of the property by making two changes: 

1. Remove the "boundary line" and ask the city to consider the acre one tax parcel with 6 units; i.e. commercial

2. Increase rents to market, thereby increasing the NOI, and driving the value of the property much higher due to the difference in how residential 2-4 unit properties are valued versus commercial 5+

Proforma markt rent is $1250 per unit x 6 = $7500/mo or 90k annually minus expenses of $25,550 annually = $64,450 in NOI. Assuming the listed CAP rate of 4.4, the property is now valued at $1,464,772. Even if I paid full price, the appreciate is incredible and I have 30 year conventional loans in place...

Where is the flaw in my thinking? Current NOI is only $43,390.

Thank you for your input.