Two houses on one lot

[Brent Geubtner]

I'm looking into a property that has two seperate houses on the same single lot. Is this a tax advantage over having two lots (one for each property)? I'm figuring that paying for one lot is better than paying for two in terms of taxes. Are there any other implications to having two houses on one lot that I may not be considering?

[Nick Maugeri]

Quote from @Cliff Benner:

Quote from @Nick Maugeri:

Quote from @Brent Geubtner:

I'm looking into a property that has two seperate houses on the same single lot. Is this a tax advantage over having two lots (one for each property)? I'm figuring that paying for one lot is better than paying for two in terms of taxes. Are there any other implications to having two houses on one lot that I may not be considering?

Should purchase two separate lots instead of two homes on one. Two homes on one lot will not appreciate as easily/quickly as individual homes on their own lots. Also, your buyer pool is greatly lowered when you try and sell, consider carrying costs and demand versus affordability in your area at projected time of exit.

I know for me, I would be more worried about the an appraisal, the property i found is one lot with two houses on it, the houses are the same sizes as the rest in the neighborhood and the purchase price is comparable to one house in the neighborhood. So if I could get them each appraised as the same value as the houses around, then it would be a great BRRRR I would hold onto for a long time.

Doesn't quite work like that. Appraisers will seek out other properties that are most similar - they use other sales that comp for two homes on one lot, three homes, etc. They don't say the median PPSF is $230, average home size at 1,500 SF results in value of $345K. Two homes results in $690K appraised value. They are instead going to find comps where two homes on one lot sold within a certain distance at $500K, and three homes on one lot sold for $650K, then establish an average and adjust for conditions. A glaring mistake many folks make is building an ADU and thinking that the PPSF is going to be tacked on to their home which is not the case. Rather, the appraiser will use other sales that have one home with an ADU as a comp, or JADU, etc.