I've been working on an acquisition of a vacant triangular shaped lot on the southern border of center city in Philly. I have an investor that does new builds in already established neighborhoods to rent them out, regardless if it is zoned RM1 or RSA5. The hold up is how the property would refinance to pull all of the money out.
Once built, the structure should have roughly 1900 interior square feet with an 18 foot frontage that comes to a narrow point towards the back of the lot. Based on square footage, it should comp out to roughly 530-560k BUT that is comparing to normal 15-16 footers that are normal rectangular shaped. I'm having trouble quantifying how much of a price cut the shape would make to a refinance since the difference in value seems very subjective.
APPRAISERS PLEASE HELP!
How would you compare a triangular/trapezoidal shaped property on a triangular lot to a typical new build? Are square footage, proximity of comps, and finishes still take precedence?
@Jimmy O'Connor I have a feeling most appraisers would say that the shape doesn't have an effect on marketability and will not reduce the price unless the shape causes some kind of functional obsolescence. Like you said though, valuations are subjective and that includes appraisals from professional appraisers. Some may make a single line adjustment for inferior quality due to layout, some may just say it doesn't matter.
Hey Jimmy! Is it a multi unit or single family?
Personally I’m not a fan of there irregular lots/builds. I’ve come across quite a few (multi family) I looked at buying, but really felt like the odd layouts it created would be a tough sell for renters and eventually a tough sale.
My guess is that your investor buyer is going to use some specific portfolio lender to refinance when the time comes to get the cash out. And that he has probably used that lender before, and that this lender uses a certain appraiser.
If my series of guesses is correct, then that appraiser who will eventually be evaluating the property should be the one to answer what the impact of the unusual lot might be. And your investor buyer has probably had other property appraised by this same appraiser, so the investor knows who to talk to already.
@Mayer M. this would be a SF! 4 beds / 2.5 baths
I feel like it’s a tough sell, but have never done it before