Establishing Value on Multi-Unit Property.

[Brandon Hughes]

I'm having trouble valuing a multi unit property for sale in my area. It is a homepath property and cashflows better than anything else in the area. I plan on occupying one unit for a year then moving out to purchase another property. Once I move out I want to keep it for passive income. I plan on managing it myself, I already manage one other unit now so I'm familiar with managing tenants.

The property has two units, one is about 1000 sf 2 bed 2 bath with a huge garage. The unit needs somewhere between 30-35k in work. I have an equity line/401k to fund the repairs. Rehab will cost about 200/mo to repay in interest. It will take at least a month to get ready to rent ready. I can probably rent this for 1000$ mo conservatively depending on how nice it is finshed/ layout once completed. (not a good layout now)

The second unit is a newer mfg home 5 bed 2 bath about 1500sf. This one needs minimal work; paint, flooring, ac condensor and minor repairs. This one can be ready in a matter of days and has a great layout. It can command around $1500/ mo rent.

It is a FNMA REO and they are asking 200k. It has been on the market for a couple months, longer than it should in this area.

I think there is a deal here but I don't know how I can put it together. If I have a valuation on the property I can prepare myself to put it together.

There are no multi unit comps over the last year to use as a valuation. This is where I am having trouble.

Any help would be greatly appreciated.

Brandon

[J Scott]

Originally posted by @Brandon Hughes:

@J Scott I appreciate the input. Living in socal I find many BP rules don't apply to REI. Everything seems to be much more expensive for REI.

I'm troubled further because in my area (so cal) 150k can barely buy you a 2 bed 2 bath at 1000sf. Which would be only be equivalent to the smaller unit. Average sf price in my area is about 140$+ sf.

If the property is worth so much more than I suggest, why has it been sitting on the market at $200K for several months with no buyers?