I looked at a property in the Garland/Dallas area and I am trying to figure out the best way to evaluate it.

It is a 4/3, but part of that includes a converted garage that is already split into multiple rooms with its own entrance and AC. With some work like adding a bathroom and kitchenette, it could realistically become a separate 1 bed unit.

The main house has been nicely updated. Kitchen, bathrooms, and flooring are all done well and it is fully move in ready. What makes this one tricky is that it is both renovated and still has a lot of potential at the same time.

As it sits now, it could be rented or sold without doing anything. But the garage space is more outdated and set up in an odd way, so I think most buyers will just see it as wasted space rather than fully understanding what it could become. There is also an insulated building in the back with AC that could have additional use with some cleanup or light work.

The challenge I am running into is comps. There is really only one nearby property with a similar converted garage, and it is basically the finished version of what this one could be. If I use that as ARV, the deal starts to make more sense. But most of the other comps are standard 3/2 homes with actual garages. If I underwrite it that way, as a 3 bedroom with some converted garage space, the numbers get very tight.

So it feels like this property can be viewed a few different ways depending on the buyer.
- As is, it is basically a 3 bedroom with bonus space.
- With some work, it could be a 4 or even 5 bedroom 
- Or it could be set up as a house hack with a separate unit.

I originally tried to make it work as a wholesale deal and could not get it to a number that made sense for the seller using traditional flip metrics, which I understand from their side. At the same time, I do think there is real potential here, just for a different type of buyer. That is where I am getting stuck on how to confidently land on a number that makes sense for both sides.

- How do you approach ARV when there is really only one semi relevant comp and everything else is a different product type?

- If you were buying this as a house hack or co living setup, would you still stick to strict investor discounts or be more flexible based on the potential? 

- Would something like being around 20k- 30K under a realistic retail price be enough to make this interesting in that kind of strategy?

I am still learning on the house hacking side. I have reached out to someone local who does co living to get their perspective, but I wanted to ask here as well. I would really appreciate any insight from people who have dealt with properties like this. 

Thank you! - Haley