Commercial or Residential valuation on Non-conforming building?
Wassup BP!,
I'm evaluating a post auction deal in West Baltimore City (Allendale). Its currently zoned R-6 with 2 Apartments and a Non-Conforming Beauty Salon. It has the Beauty Salon and an "unused commercial unit" that the owner uses for storage. As background, the owner does not have leases in place, all his tenants have been month-to-month, with one tenant and the salon currently renting. My question is, how do I "value" the property? With the zoning, its listed as Residential, but since its non-conforming does that allow it to qualify as a commercial property? I think there's about a $50-100k swing in ARV (the higher valuation being commercial at a 7-8% CAP rate). I'd like to put an offer in this week since i think there is some value add in the property, but I can see at this point why it hasn't sold yet. My gut says, it will require a residential valuation and conventional mortgage to BRRR into.
But what say you BP? I feel like @Ned Carey may be one to weigh in here.
Thanks in advance,
-Michael