So I'm in the process of buying a home (yay - first investment property). However, the home appraisal will be on my own home because I'm doing a cash-out refi for the loan. Because I'm buying the property in cash, there is no appraisal required on the home I am buying. I'm doing a buy and hold situation where I'll be putting tenants in the property, and the numbers do work.
So, my question is this: Should I go ahead and spend an extra $400 to get an appraisal on the home I am purchasing? My real estate agent says other than for information, it will not be of value. My lender suggested it, and of course the home appraisor I talked with suggests it also. What are your experiences, and thoughts? If the home inspection falls through, I'll be out an extra $400 as well.
Thanks for your advice!
You'll likely have to pay for an appraisal when you do your cash out refi and you'll have to pay for that one. I'd only get an appraisal on this portion of the transaction if you're worried about your cash out refi appraisal not coming in where it should be. If you get an appraisal done now, and it turns out the building is only worth $100k and you're paying $120k (as an example) than you could be clued into that you may be overpaying for that product. That would also mean that you'd need to add an extra $20K in value to be able to pull out 80% of your cash in the refi process. If you're not worried about the property appraising well, then save the $400 for some upgrades on the property.
Lastly, I've made several all cash purchases this year and then turned around and pulled out 75-80% of my cash right back out and the lender just used the purchase price as the appraised value...
Hope this helps!
Thank you so much. Yes, I do have to pay for a home appraisal on my own property, so I definitely don't want to pay for 2 appraisals unless I need to in order to do this wisely. I knew I needed to ask real estate investors... people are not vested in either my purchase of the property or my purchase of a particular service.
Thank you for the information about your cash purchases-- this is really good to know and it helps to ease my mind a bit!