How does this work🤔🧑🏼‍🏫?

Question

What up BP Fam? Quick question. If you buy a lot and build 2 separate homes on that same lot, how is it evaluated by appraisers and banks? An no it is not a subdivided in any way, just one big lot with 2 new builds on it. I appreciate all assistance and suggestions.

Jimmy Lieu · Answer

Good question, this is one of those things where the answer really comes down to zoning and how the property is legally classified, not just what you build on it. If you have one lot with two separate new builds and it’s not subdivided, most lenders and appraisers are going to treat it based on what the city allows it to be used as. If zoning recognizes both units as legal dwellings on a single parcel, it will usually be appraised more like a 2-unit property (or sometimes a “two homes on one lot” situation), and they’ll try to pull comps from duplexes or similar multi-unit setups if available. If it’s not clearly allowed as two primary residences under zoning, that can get tricky fast because some lenders won’t finance it with standard residential loans and you may get pushed into portfolio lenders or construction-to-perm financing that are more flexible. Appraisers also lean heavily on highest and best use, so they’ll look at whether the value is really in it being a duplex-type income property or just two separate SFRs sitting on one parcel that technically shouldn’t be there. Insurance, utilities, and exit strategy also matter a lot here because they all have to align with how it’s legally permitted, not just how it’s physically built.

Denise Supplee · Answer

Hi @Michael L., nice to meet you here on BP! I’d just be careful here because the answer depends heavily on zoning, legal use, and financing. If it’s one parcel and not subdivided, the bank and appraiser may treat it as one property with multiple dwellings, not two separate sellable homes.