So I hear all the horror stories of getting a low appriasal when attempting a BRRRR deal. The issue I am having is a little different. I purchased a single family property at $51,000 and put about $30,000 into it (also a lot of sweat equity). When I ran my comps, I came up with an ARV of $130,000. I applied for the refinance requesting a loan of $100,000. I just heard back from the appriasal and it came back at $141,000! I was thinking I hit a homerun! The bank, however, feels the appriasal is incorrect due to me only being into the property for $81,000 and claiming the comps are not true comps. The bank is now challenging the appriasal and changing the terms on the loan.
Has anyone ever heard of this before? If so, an tips? Thanks!
Sounds like a good problem to have. Find a new bank.
See if you can find a lender who would be willing to use the same appraisal
I have seen appraisals challenged before but it usually due to the property being unique and there being no real comps in the immediate area.
@Nicholas Boccella just like @Tarik Turner and @David L. said its the bank. Sounds like you have a bank that is trying to give you a LTC (loan to cost) not LTV (loan to value) loan. Find a new bank there are many out there that will take care of you. Also, run those numbers (if you havent already) past some other people around you that you trust and see if you get atleast 3 green lights of approval. Hope it helps and congrats on your homerun.......hope you make it around all bases lol.
@Anthony W. @Tarik Turner @David L.
Thank you for your input. After a long discussion with my lender, they have decided to honor our original deal. The bank was worried about me being an out of state investor who just listened to an infomercial about flipping houses. I explained that I have strong ties to the area and have already done three deals in the area (with them). All good in the end! Thanks again!
@Nicholas Boccella :
Thanks for this post! My husband and I are on the hunt for our first BRRRR deal in NJ and discussed this same exact scenario! Now, we know how to handle. May I ask what city you were able to successfully BRRRR in?