Getting Re-Appraised - What can I do to Maximize the Appraised Value of My Property?
Hi everyone,
Thus far, my first investment has gone well (fingers crossed). I've got a wonderful tenant in the other side, a safe, stable place to live, and in a wonderful surprise, prices in the neighborhood have risen dramatically in the six short months that I've lived in and owned my duplex.
Here's my situation:
I bought my duplex in November for $240,000. As of today, similar properties (less square footage, smaller lots) are selling just a few blocks away for over $300,000. I've talked to my banker, agent, and other investors, and they all agree that there is a decent shot at a re-appraisal coming in at over $300,000.
Why a re-appraisal helps me:
I currently am financing the property with an FHA loan. I was entertaining this possibility of rapid appreciation when I first made the purchase and put down just 5% ($12,000), got an adjustable rate mortgage, and pay mortgage insurance.
Refinancing this same property with conventional financing at 20% down will remove my mortgage insurance ($240 per month) from the equation. This will significantly increase cashflow, and more importantly, free me to use another FHA loan to purchase a second property by the end of the year. I'll also get a fixed rate mortgage to lock down low interest rates over the next 30 years.
So. My question for the community is this: What actions can I take to give myself the best chance to get a very high appraisal value?
Here are some of my options:
1) Landscaping - Putting in a nice fence and replanting the lawn will be great aesthetic touches and I can do them at low cost (less than $3,000 and a few weekends of solid effort). I plan to do this under almost any circumstance.
2) New roof - The property has a flat roof that's about 15 years old. I know I need to put on a new roof in the next few years, but think that I can push it out another 2, maybe 3 as things stand. I'm considering putting a new, sloped roof on the property (~$17,000). This would have the added advantages of lasting longer, and reducing my insurance payments by about $80 per month. A new flat roof is ~$12,000 based on recent quotes.
3) Electrical - I haven't really done much with the electrcial, but could potentially increase the power to the property and update all the systems. This would add longevity to the system, and hopefully increase the appraisal value. There are also a few issues in my side of the unit that I've ignored (outlets that don't work). I'd need to get these repaired when I moved out for the next tenants to inhabit the unit. The basic repairs are likely to be about $500. Not sure what a full upgrade would be (maybe $5,000??).
Can anyone give me some advice on which of these steps are necessary/likely to pay off in an appraisal? Is there anything else that I can do to give myself the best possible chance at increasing the appraised value of the property?
A win is getting an appraisal above $300,000. Anything beyond that is gravy that I may be able to use as purchasing power towards other investment properties.
Thanks!
