HELP: FHA Appraisal Issue - Projected Rents

[Kyle Rosseau]

HI BP

I am in contract with a 4 Plex in Oakland CA. We are about to close and just got notice from the appraiser that the current rents are projected to be $4,400. Apparently the FHA loan has a self-sufficient guideline that states, "Subject must be self-sufficient. 85% of the Fair Market Rents on all units per the appraisal must be greater than the PITI". Due to this guideline that projected rents would need to be $5400. Based on my analysis of current apartments for rent in the area and my realtors opinion that has rental properties, getting $1500 per unit would not be a problem and would still be considered under market. It looks like, through the appraiser report, that he/she is using existing rents from properties on the market right now (and properties that have long term tenants that are under market). I've talked with my realtor and broker and we want to discuss this with the appraiser and see if he/she would revise based on market rents that we show them (we have existing lease agreements of similar units paying more than $1500 from my realtor). Does anyone have any experience with this and can offer any help?? This is my first investment property and I am so close to closing this deal. This is seeming like it will shut down the deal!!!!

As always…thanks in advance.

Kyle