How To pull comps for a small multifamily

Question

I am looking to house hack a duplex or triplex and was sent a property to evaluate to see if I was interested.  It is a duplex in a neighborhood of primarily single family homes.  For this reason, it had more bedrooms and was priced much higher than the homes in that immediate neighborhood. I was curious as to the best way of pulling comps using a site like realtor.com or Zillow.  Also, if I cant find many duplexes in the area, how can I account for this, should I use duplexes in a farther out area or look for a similar size house with similar numbers of beds and baths? Thanks for the help!

Jacob D Adamczak · Answer

@Mike Zahniser If I go the FHA route, with the higher borrowing amount and mortgage insurance, is it still reasonable to expect to pay near 0 or should I evaluate as if I paid a 20% down payment for a conventional loan?

Mike Zahniser · Answer

I wouldn't really pay attention to the prop value comps. Use the BP Calc and figure out if the numbers as a rental make sense with the price you pay vs the income form the property if you were to rent it out and not live there. If you have cash flow (ideally you will live for almost 0) then its a good price. If the numbers don't make sense, do it again and lower the purchase price till the numbers make sense.Remember to factor in all potential costs, snow, grass, lawn, repairs, vacancy, Prop mgmt (think for the future).

Jacob D Adamczak · Answer

@Frank Wong  Thanks for the suggestions, this seems like its a little tricky to get an accurate number until you've done it several times.  How do you find the data for sold units in the area for the past 3 years? I am looking at the property on realtor.com right now and don't see where you can find past sales, I only see what is currently for sale.

Frank Wong · Answer

Hi Jacob,

This gets tough because there are no direct comps. First, broaden your search to the last 3 years. Now there should be more sold properties that fit your criteria.  You will need to adjust for a price increase to get yourself a value.

2nd thing you can try is to look for comps that are a duet which is a half unit. Now you have a base on what a partial unit to your duplex will be. You can't use the full value because the price will be higher because it has its own parcel number.

These are the two things I would use. Now the tough part is the adjustment. This can only be learned through experience are taught by someone who knows it.