Wholesaler · Kansas City, MO · Member since 2020 · 14 posts · 3 votes
I'm looking at picking up a property in Kansas City, MO for fix & flip. It is not quite a deal at current asking price. There's barely not enough spread for profit. The front house is a 2-1, 950 SF. However, there is an additional standalone 1-1, 450 SF house in the back yard which has been rented successfully within the past couple of years. If this were fixed up to rental condition, it could be pitched as an income generator for retail buyers.
My question is, how do you go about evaluating the numbers regarding my offer price? How much more does this 1-1 rental add to the value of the entire property, along with the main house, a 2-1? I'm sure there are many ways to consider this, but would love to hear anyone's initial ideas. I think this could be a great deal if the back house adds enough value. Thanks.
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
5y
Weird properties like that are tough to value. I generally look at those as cash flow plays as I don't see odd "duplexes" like that appraise for much more than just the house (although admittedly I've only had two or three of these done before). One thing I would want to check is that it is permitted or at the very least "legal, non-conforming." It would definitely add very little value on an appraisal and not much on a sale as well as be a risk with the city if it's not allowed to be a rental unit.
Wholesaler · Kansas City, MO · Member since 2020 · 14 posts · 3 votes
5y
Good questions @Caleb Brown. This particular property is in 64117. It is zoned R-6, which I believe permits household living, but not group living. Maybe the back house cannot be rented out as a separate unit. I will have to dig into whether the back structure runs separate utilities.