(LA) Appraisal issues on BRRRR Multiunit when there are no comps?

[Michael DiMeo]

Hello fellow investors! What do I mean "no comps??" Allow me to explain - I'm considering doing a BRRRR on a multiunit here in Los Angeles! I'm running the BP BRRRR Calculator and the numbers are seeming solid as the 5-plex will be delivered vacant (need to confirm this with the listing agent still) and therefore I can renovate and up the rents for the next tenants, BRRRR style. A multiunit being delivered vacant in Los Angeles is pretty rare because with the rent control laws, people tend not to leave units like this very often. The property also seems fairly distressed and in an up-and-coming neighborhood. It ticks all the boxes!

The thing that worries me is that my estimated ARV seems very high for the neighborhood - looking at the comps, all the multiunits that have been sold lately are all distressed properties like this one. Therefore, when appraising for the refinance, I'll be asking for much more money than literally all multiunits in the neighborhood have recently sold for.

If there are no fixed up multi-units in a neighborhood that have recently sold, has anyone had a hard time their appraised value where they expect it to be?  There's literally no multi-unit comps that have sold in fixed up condition in this neighborhood.

Thanks in advance!