All Forum Posts by: Joshua Woods

Where are you located Alicia? Thanks!

Thanks again Scott! I was told there was a possibility that an appraiser may say that I have to fix the property to what it was zoned as, which is kind of making me not want to take the risk, but based on what you're saying it's not really going to happen if it looks like a good multi-family property. I appreciate the response!

To clarify, it is NOT grandfathered and is considered "nonconforming" per the city.

@Scott Lakas

Thanks Scott! Yes, the city said I don't have to change anything. They said I can keep it as is. The rub is the appraisal. Would you, as an appraiser, or do you know fellow appraisers who would not appraise the home as a multifamily because it is zoned for SFR only? I need a good appraisal for the cash out refi portion of BRRRR. As in, would they say "it's zoned as an SFR so you need to make it an SFR for an appraisal?" Or say it functionally obsolete if I just put an arch between the duplexes for the appraisal?

@Bethany Moklebust

I saw the meet up y'all had but I was out of town. I'll endeavor to be at the next one.

@Allison Steinly MLS. It was listed, is taxed as, and listed per the parcel # as a multifamily. I literally called the city 2 days prior to close based off a BP podcast I was listening to. Good thing I did!

I ended up asking for a 20k price reduction in case I have to convert it back to a SFR otherwise I'm going to back out.

The risk is with the appraisal, but for the refi and when I intend to sell years down the line...

I'm in the process of purchasing a property that I just found out was turned into a duplex when it's zoned for SFR. (So it's a nonconforming structure) It's in Yuma, AZ. It's a BRRRR, so I need to cash out refi after the reno. I talked to a lender, who said they didn't really care what it was zoned for, they would lend. Does anyone have any experience with this type of issue? I won't need to pull permits for the reno, it's cosmetic. Also, if I back out, I lose $2,500 of earnest money.

The ARV of the duplex we're thinking is 160-170k(for rooms/sq ft), where SFR comps are 155-165k(for rooms/sq ft)? Will an appraiser look at it differently? Thanks!

 Dan,

Thanks for your response regarding BRRRR. I looked into it and made it happen. Got the price down to 120k cash also. ARV should be around 160k. With 15k reno I should only have 15k tied up and have ~$5400 a year cash flow for ~33% return, conservatively.

Thanks for the rudder steer!

@Dan Beaulieu I agree and was kinda sad I can't do 20% (apparently a Fannie and Freddie rule). That is my goal soon, I'm just now education myself on hard money/private money lenders so I can BRRRR. I really wanted to move on something as it seems I've been in analysis paralysis for about a year now.

Also, I re-ran the numbers with a 10k reno and total rents received (after paying utilities) at $800 (which I've had a realtor, lender, and local inspector/contractor confirm are market rents for the area with the upgrades) and I came up with a 22% CoC return.

@Jacob Simpson thanks Jacob, good point that I did not account for. So I changed the offer to apply seller credit to closing costs, which they accepted and brings my CC down to about $1300.