All Forum Posts by: Jasen Ballenger

Hi Angel, unfortunately, in the time it took us to work out the numbers, the seller sold to someone else.  If we'd have just been able to pay cash without using a hard money lender, we probably could've had it.

They are asking $165K for the whole sale, but he told us he'd take mid-$150K, so we're assuming we could safely make an offer at $155K that would be accepted.  The small house has had one renter for 10 years at $600/month (never raised the rent in that time) but the seller is confident it could go up to $800.  The renter is an engineer, so could feasibly withstand the rent raising, but he advised us to go up to $675 to start and get to $800 over a period of a couple of years.  Because this renter has been so stable and we can avoid having to renovate his house, we'll probably go with that suggestion.  This house used to be a detached 2-car garage and is currently a 1BR 1Ba.  It would be hard to find comps on just this house alone, but we're estimating it would be worth $90K alone.

The bigger house last rented for $900 but we're confident that after a cosmetic update we could easily get $1,200/mo.  If it were just that house alone, we think we could $140K for it.  If it were just that house and we converted the smaller house back into a garage, we could probably get $150K.

What to do, what to do? If we could self-fund the whole thing as a buy and hold, we think it's a good deal. But we can't do that and were hoping to BRRRR. So now the question is, do we stick with our original plan or modify? It's very hard to find even reasonable buy and holds in our immediate area and it's only 10 minutes away from our primary residence, so we're comfortable doing the property management ourselves. Plus its an area in which we could attract quality tenants and the big house alone will surely appreciate well.

Yeah, it's probably wishful thinking for those with the property with 3 houses - they are all smaller than the main house on the property we want to buy and none are in good shape at all (we looked at that property last fall and didn't pursue it).  

So (newbie here) if we have an appraiser come out, won't it be difficult to get the ARV since it's not repaired yet? Or with a solid appraisal, will a lender understand we can calculate a solid ARV from the appraisal + the estimated higher value based on comps on the bigger house? I.e. if it was just the bigger house, we think the comps are solidly at $150K. But we're wanting to tack on the little house at $90-100K. Because the little house has a solid renter who's never asked for anything to get fixed, we're not planning on fixing up that house beyond exterior paint.

@Rochelle Thea Fabrizio, thanks for the reply.  There is another situation on the block over with 3 houses on one lot, similar age (140 years) to the main  home we're looking to buy.  It's been on the market for several months and is probably overpriced at $269K since those homes aren't renovated.  But do you know if lenders would accept that as a comp?

If we just calculate the bigger house on this lot, our numbers won't work to BRRRR. And ironically, it's the small house that has a solid renter already in it.

Thank you for responding @Guifre Mora - but if they did an appraisal now, it would be before we update the house(s).  Do you know if I can pull comps on what each house would be separately and just add them together?  I'm coming at this wanting the lender's perspective since getting the loan pre-approved is where we're at now.

My wife and I are looking a buying a property from another investor that is a bit unusual.  The half acre lot has a 3BR 1Ba house and a garage that decades ago was converted into a 1BR 1Ba house.  The seller bought them exactly as they are now 40+ years ago and both have been steady rentals for him.  The smaller house has a steady, easy, ongoing tenant. The bigger house is currently empty and just needs a cosmetic update. Great area with lots of appreciation, attracting area for quality renters.  It is also in our town, which makes it attractive to us to be able to self-manage and because it's hard to find distressed properties here.  The price is right as-is and the seller has already indicated he'd be willing to knock $10K off.

According to the county, they are one property; somehow, the current owner managed to get the post office to create a second address to the smaller house.  The electric and gas are completely separate; the water goes to the bigger house, then splits off to the smaller house - each with their own meter.  

If it were two separate houses, the numbers all work great to BRRRR. But the reality of them being able to be sold separately is complicated (and have a fair chance of not being approved by the city council) and would cost at least $15K to do. Our goal is continue renting both and not sell hopefully for several decades, but we'll need to provide an ARV to both our hard money lender for the original purchase and to our refinance company.

Thoughts on a) how to calculate ARV on such a property, and b) is this something that you'd go for since everything else looks great or avoid? TIA!