No comps, how do I prove value?

[Tequila Lamar]

Hello!

I'm trying to get hard money financing for a rehab and I'm having a hard time finding comps for the ARV. Looks like I'm going to be the first to establish value in this area but I need existing comps for the appraisal.

Does anyone have any advice for how to handle this situation with hard money lenders/appraisers?

We have a duplex and we’re doing a full gut. It’s hard to find fully rehabbed duplex in our area. We have some comps to support but they’re more than a mile away. Our plan is to air bnb both units and potential income also supports the value we believe we will have. 

Thank you in advance!

-Tequila

[Bentley Hazelwood]

Use a larger radius to find sufficient comps. or try finding the value as it were a commercial property. Maybe use the average of both to justify a value.

Use the formula: Value = NOI / Cap Rate

ex: 

Market rent [not AirBnB rates] = $1500/m x 2 units  = $3000 [-minus] Operating Expenses = $300/m 

NOI: $2700 x 12 month = $32,400 [/divided by] Cap Rate: 10% [depends on area] 

= Value: $324,000