Properties With No Comps

6 Replies

Hello,

So currently I am pursuing two fourplexes and a duplex all being sold by the same seller, specifically the executor of the previous owner's estate, who passed away. I am trying to get all three together in order to get a better deal on the homes.

These homes are located in a largely rural area so there are literally no comparables to compare these homes to. Basically all of the homes are single family homes. I was planning on using 20% down and getting all three using conventional mortgages, however my broker said I would have to go commercial since there were no comps in the area.

He said that I could go commercial on one fourplex and the duplex, then use conventional on the other fourplex since the fourplex bought with a commerical loan could then be used as a comp.

I thought about doing this and then refinancing the two commerical loans into long term 30 year conventional loans. I do not have enough money to buy the first two in cash. What would be the best way to approach this situation? I also thought about using hard money/private lending to purchase the first two then paying them back once I refinanced those two homes into conventional mortgages. Let me know what ya'll think. 

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@Bob Bowling from an income standpoint it will have great cash flow for the price.

@Rob Witt I was considering that too. Do you think it would be possible to do owner financing for the first two in order to get comps, then use conventional for the other and then get conventional loans on the other two?

Originally posted by @Jeremy Taggart :

@Bob Bowling from an income standpoint it will have great cash flow for the price.

Um, where did the "price" come from and you still have no evidence that you are not over paying.

@Bob Bowling Two people agreeing on a price is a market, so he is paying market price :).

Sometimes pricing real estate is more art than science, and that is likely the case here.

Originally posted by @Russell Brazil :

@Bob Bowling Two people agreeing on a price is a market, so he is paying market price :).

Sometimes pricing real estate is more art than science, and that is likely the case here.

Both parties have to have market knowledge to have a market price.  If both parties are ignorant of the market they can still come to terms but that does not make it a market sale.

I see too many people here that don't even look for the market value of a property but use numbers that "make sense" when they don't even know what those numbers represent. 

Here it looks like he is looking at money coming out of the property but hasn't determined if that is possibly his own money coming back to him.  That's not an investment.