I'm in the process of doing a cash out on my current BRRR.
3 single family homes on one large lot. Qualified as a triplex when I bought it.
Purchase price: $200K
Current rentals: $3,300/Month
The property is fully leased
Now I'm trying to do a cash out refi. Quoted rates are great and a preliminary CMA from my loan broker and RE agent show a potential valuation between $350K and $400K. I'd be happy if it came back at $300K.
Now my loan broker is saying that he can’t find an appraiser that will appraise the property because it’s unique in the sense that it’s 3 SFRs rather than a traditional 3 unit building. He says that appraisers are saying that comps are hard to find.
Anyone have this issue before? How did you deal with it? Thanks in advance.
I have not had this issue before, but if I do, I'll call other brokers and appraisers and see what they can offer or suggest for an alternative method of appraisal that the broker/lender will agree to. If they don't want to use the comparative sales method, then can you use your NOI?
@Samir Solanki they should be able to use other methods such as the cost methods or Roi if they are really in a pinch for comps.
Thank you for the response. I'm going to look and see if they're use ROI for valuation. But from what I remember, if the property is less than a 5Plex, they have to use the comparable sales method in order to qualify for conventional financing. I could be wrong? The rate I'm getting on the cash out over thirty years is 4.25%, which I really don't want to give up. But if it doesn't work out I may need to look at other financing options, which I'm sure will be more expensive.
@Samir Solanki , its probably more a matter of price. Is your broker eating the appraisal cost or passing it along to you? I would guess the broker is offering a standard appraisal price, but something like this would typically cost a bit more than a standard appraisal.
@Kevin Sobilo That's a great point! I'm paying for the standard appraisal cost which comes out to around $700. I actually don't mind paying a bit more to "entice" other appraisers. Thanks for the input.
I see this issue sometimes with clients. If they can't find 3 SFR comps than they will have to use triplex's as comps. They will then need to justify the use of triplex's versus 3 SFR on a single lot in the appraisal, as there are no similar comps.
I believe that's what the appraiser did when I originally purchased the property to get the comps. When I bought the property, it was listed as a single family. Now we're doing the cash out refi as a triplex since the property is a triplex and that's why no appraiser wants to take it. I've upped the payment amount for the appraisal so hopefully someone will bite.