How will a bank appraise my rooming house?
I am looking to (finally) make my first deal on a 3-bedroom single-family home in a college town for about $80,000. But I have a big question.
My intent is to:
1. Purchase with $80,000 cash
2. Some light rehab to create 2 more bedrooms, and fully furnish ($15,000)
3. Turn into a 5-bedroom rooming house for college students
4. Get appraised based on income it generates ($500/bedroom), aiming for at least $130,000 ARV
5. Refinance and take $80,000 out
I am hung up on Step #4. I've read that multi-family properties are appraised based on the income they generate, and single-family homes are appraised based on comps. Do I have any chance of getting a bank to appraise this single-family home based on income and NOT comps, once I've fully converted it into a rooming house, fully rented it, and secured all the necessary city hall approvals?
Thanks for reading!