Cincinati 5 plex exit strategies options

[Henry Offiah]

Hello BP,

I'm looking for some advice. I've got a deal under contract in Cincinnati Oh. It's a 5 plex but city officially sees it as a 4 unit because when the original owner filed the paperwork that was the classification given.

My seller tried to get a variance, but city said they wouldn't qualify. And if they tried to rezone the building it wouldn't be approved.

Has anyone experienced this? If so how did you go about getting it rezoned or is it not possible?

Seller was asking for 250k for building based on it being a 5 unit. But first appraisal from first buyer came back at 200k and mine came back at 185k within a matter of 2 months. Seller is willing to go for appraised value putting the deal at a 9+ cap.

Thanks in advance.

[Lee Ripma]

@Henry Offiah

I’ve been in this position before. If it’s legally a 4plex and city only I allows 4 units then I would only have 4 units. I don’t personally ever operate illegal units because if something were to go wrong and you have illegal units you’re going to have an issue. Sounds like the seller is willing to take 4 unit price. Sometimes 4 units can be more valuable than 5 since way easier to finance and has both Comp and cap value.