BiggerPockets

I believe you are using your terminology incorrectly.

There are never two properties on one lot! There may be two buildings one lot. Or there may be a duplex (2 units) but one building which has 2 separate address for multi family purposes.

Each property is sold in its entirety with all the land and buildings that come with the "lot" unless it is subdivided, in which case it becomes two separate lots or properties.

If a building has been condemned, in most cases, no one is allowed to enter such a building. Not even to attempt to fix it up because it is unsafe for anyone (even an experienced contractor or builder) to be inside. and thus it was condemned. Usually the only option is to (as you said) tear it down and remove it.

No such thing as a free lunch.

I have such "a" property. Two detached SFR on one lot, one behind the other, with separate adresses. The only thing they share is a water bill. When I look at the tax info, it's as if the back house doesn't even exist, except that it's zoned for two families.

Built between 1890-1900, it is considered an approved zoning variance, meaning it doesn't comply with today's zoning, but the city can't do anything about it. There may, in some areas, be limitations placed on what you can do with such a deviant property. I have been told by local inspectors that the city would prefer the back house be torn down, and that I would be unlikely to get any building permits approved (in essense, I would be prolonging the life of a building they would like to see go away).

It is unlikely that you would be able to split the property, unless it satisfies current street frontage, setbacks and minimum lot size requirements, and asking for an exception would be a very long shot.

You can't look at this property's ARV as if it were two sparate properties. It is, essentially, a duplex, and the zoning should reflect that, and when looking at comps, should be compared to other duplex properties. That they are detached should be considered, but I have found it's not material.

I'd check with local zoning and building inspectors to get their take, and check for any existing code violations and any potential obstacles in the "R" part of your ARV. The best way to determine what you can expect is to go to the source. Worst case, if you still want to move forward, is you'll have ammunition to argue a lower price if you do find limits on what you can do with the property.

In the FWIW category, the second house, since it is behind and away from the street, is an really easy rent. Mine has a driveway leading to parking between the two and the back house is quieter and secluded. The downside is trying to sell. The unusual and "grandfathered" nature will raise questions and doubts, just like you're doing now, and there will be those investors who will just not consider such a property in this market for those reasons.

Of course, you experience may be different. Just don't scrimp on the DD, and if the local authorities do frown on the property and will make life difficult, it's a good argument for a significant discount.

Originally posted by Shane M

...
Right now I'm at about 25K in repairs, it is listed as 25K and both units together could rent out for 1100/mo. That leaves about 200 in cashflow without low-balling the deal.
...

$50K invested, and $1100/month rents - this meets the 2% rule.

Originally posted by Shane M

2.2! :P And with potential for better if I can negotiate lower (or worse if the repairs cost grows), but as always it needs a more thorough analysis

Shane,

The 2% rule and 50% rules are simply meant to be used as a filtering mechanism, to determine whether a property is worthy of the additional more thorough analysis. Properties that meet the rules mentioned are definitely worthy of that extra effort, in order to be certain that the numbers in reality coincide with the projections that were made.

Were you able to find financing for this, or were you trying to buy it in cash? I am interested in buying two properties on one tax lot, and finding financing with a fixed interest rate is providing to be challenging.