Could use your help determining ARV on a duplex (Newbie warning)

[Mark J.]

The duplex is REO (2 yrs vacant), 6 bed/4 bath/2,200 sqf. Purchase price= $44,900. Est. repairs= $35K. My

COMPS: There are six duplexes, exactly the same, on the same block, but no recent sales:

$115,000 (sold 10/2004)

$162,000 (sold 8/2004)

$135,000 (sold 12/1989)

In the duplex next door, a neighbor I spoke with is paying $850/month on his 3/2 unit and moved in three months ago. 

DUPLEX COMPS:

• Duplex, 4/2/1,350 sqf @ $40K (1/15) – 2.5 mi away (foreclosure)
• Duplex, 4/4/1,800 sqf @ $90K (11/14) – 2.5 mi away
• Duplex, 6/2/1,400 sqf @ $64K (6/14) – 2.5 mi away

TOWNHOUSE COMPS
In a 100-unit townhouse complex 1/8 mile away: 

SOLD: One unit (3/2.5/1,600 sqf) @ $85K on 10/13 and two units (2/2.5/1,600 sqf) @ $92K in 2014  
RENT: Currently asking $1,100 for the 2/2.5 (1,600 sqf) (x4 units avail)

------------------------------------------

In an 80-unit complex ¼ mile away:

SOLD: Four units (all 2/1.5/1,150 sqf) sold between $68 - $73K in 2014

RENT: Currently asking $950-$1075 (x2 units avail)

Many thanks in advance!

Mark...

[Dave Bingham]

@Mark J. 

I'd go online and search for Tampa mls., redfin, loopnet and other listing sources. Specify your query to be duplexes, triplexes and quads. You'll find some properties, maybe even a deal but the main value is you find the realtors listing these types of properties. call them up and ask them what Gross Rent Multiplier they used to determine value. Ask them why that multiple. Does their logic make sense or does it set off a pause in your head? Once you get a list of the area GRM's and the justification for them you'll just need your established gross rents. Multiply the two together and you come up with a good starting point to determining the value. You'll also need to do the sales comparison approach based on like kind. I haven't looked at the neighborhood but from what you were telling me earlier I'd give the income approach at least 80% of the weight and sales comp 10-15%, with replacement costs rounding in around 5%.

In the end though If I recall correctly you're looking to refi anyway so a lender is going to use their own methodology. I'd try local banks and see if what they are doing matches your own analysis. Just remember your debt to income ratio will change as a dependent variable and your debt service coverage ratio will pop into existence. You may also face other restrictions as @Alex Pereira pointed out. These will impact how much you can withdraw from a refi, what you can do with the property and you also have to contend with seasoning. Over all I think It's a great plan. Keep touching base with @Jesse O. He's a brain.