Appraisal & C of O
Hello everyone, we are looking @ a townhouse that is in the process of being converted to a 6 family from a 2 family ( unfortunately). I was wondering if anyone knew what the routine is in buying a partially renovated or demolished house. Can the place be appraised if it is in mid construction…
Hello everyone, we are looking @ a townhouse that is in the process of being converted to a 6 family from a 2 family ( unfortunately).
I was wondering if anyone knew what the routine is in buying a partially renovated or demolished house. Can the place be appraised if it is in mid construction with unfinished everything? Also with the current c of o being 6 family but the work incomplete can one try to purchase as if it was the original 4 family and avoid the headaches of a commercial mortgage? I realize we have a lot of questions but any help or comments would be deeply appreciated. Thanks, pdt.
Pierre, one of the difficulties here (as you may have already encountered), is finding financing for such a property in flux like this. If kitchens/baths aren’t in place, i.e the place isn’t livable, banks are reluctant to finance, even if you are looking at some kind of construction product. If you find a bank willing to go in on it, kindly post here. Good luck!
Wow thanks everyone and sorry about the delayed response….busy @ work:) But to answer Smokychimp’s question according to the broker the home was being converted by the owner as an investment project but owner is now ill and wants out of RE and NYC ASAP hence the mid-construction sale.
King of burg do you have any recommendations for appraisers? I was told by a mortgage broker that the place cannot be appraised if it is in construction but your comment is
encouraging.
Serpent that is a good question but on ACRIS and property shark the C of O is for 6 family. Will have to investigate this further.
Ms Hong and Connor I have sent you guys an email.
Once again thanks everyone and please keep the comments coming.
I’m with Smokeychimp: my question is why are they unloading halfway through a project like that?
I did look at at least one three family that was halfway renovated and the realtor actually told us that the project destroyed their marriage. Or, rather, that Mister had always wanted this and Missus was not having it any longer. So there are reasons, but this sounds like an investment project not a home renovation, so I’d want to know a lot more about why they’re jumping ship.
Plus, how do they have a C of O for unfinished work? If the conversion isn’t complete enough to be lived in by six families, is the C of O final or some kind of provisional thing?
All of that said, your lawyer can argue just about anything. If you need a two family to keep the mortagage and R.E. tax in line, you can probably make a case that the work has not been completed. If you need the rental income from the units to support your mortgage application, same story, though you’ll probably have to demonstrate that you have sufficient funds to complete the renovation to a point where you can get the tenants you need.
You can convert to a 6 fam if the zoning is not R or R2-5
ALso,if the area is mixed use and commercial already, you prob are in a Multifamily and Commercial ZOne.
I finance, PURCHASE, REHAB, RENOVATION, AND REFINANCE
MULTIFAMILY AND COMMERCIAL MORTGAGES
gtoconnor@gmail.com
Pierre, this sounds like a renovation loan. There are loans for situations like this. My only concern is the c of o as 6 family. Are your inentions to keep it as a 6? If you intend to convert it back to a 4 or 2 then we should be able to finance. sunny_hong@countrywide.com
* srry meant “2 to 6” above
Pierre the purchase would subject to whatever the current C of O states. There is no such thing as an “as if” C of O.
But I’m very curious — can you tell us what you think motivates the seller to unload a property in the middle of a construction project like this? Converting a building from 6 to 2 takes immense amounts of planning, paperwork, and at least someone on the team with a working knowledge of how real estate works. In other words, a realistic picture of how to get it done and where the money is best made.
What’s the circumstance where they say halfway through, “hey it’s a suddenly better idea to sell this now under this condition than sell when the construction and C of O are sorted out”? I don’t get it.
The appraisal can have two values, “as is” and also “upon completion”. The prospective value upon completion will have an extraordinary assumption about the eventual finishes and quality of construction. The value “upon completion” will be a date in the future, presumably when the contractor expects to be complete with the renovation. The difference between the two numbers should be the cost of the renovation plus some entrepreneur profit.