Need help with a difficult valuation on a 2FR

[Tim Wilkinson]

Hello BP community!

I am closing this week on a 2FR, but my rehab budget is dependent on what is a reasonable valuation after repairs. 

The difficulty I have is that the only true comps (two of them sold in last 6 months) I have found are way low. They were cash purchases and needed complete rehabbing. A realtor from out of the area (unfamiliar with this market) told me to price it at $70/sf. The homes I've seen go for $70/sf are not rehabbed. 

This town has a big rental market downtown and the area is mostly investors that put minimal into their homes and rent to lower income people. So, I'm assuming that the investors are looking to pay no more that $70-75/ft.

However, even at $100/ft. with 20% down, an investor will pay under $700 for mortgage. When you add in capital reserves and insurance, water, and sewer, the cost to hold will be under $1000/month. The two apartments will bring in $1900 monthly.

Is it a stretch to list this house at $100/foot and hope to get $90/foot?