Hello guys, I'm analyzing several deals where I could use the BRRR strategy and get the most profit after refinancing (Cash Out). But I'm having trouble estimating the ARV. Since there aren't other multi-families in the area to compare to, should I use the average price per sq ft instead?
How big of a multi-family? Anything over 4 units should be analyzed on an income based approach. Most of us always look at an income based analysis anyway, but the banks will take this in to consideration for 5+ units.
If you are looking at 2-4 units, it can be trickier. If you are holding in cash, it's not as important, but if financing or refinancing is to be used in your strategies... you better understand how the bank looks at things. I've seen investors run it to trouble buying a duplex that couldn't appraise because of a lack of inventory.