Need Some Guidance on Potential Refi

1 Reply

I bought a property a few months ago that is on three city lots and .53 acres. There is a main house that is roughly 2300sqft spread out over two of the lots and one 640sqft house on one of the lots. 

Initially, it looked like the city was going to say the smaller house was nonconforming because the property is zoned for single family residential, so the appraisal came in low at 218k with the big house and all three lots. Total sale price was 247.5k. 

Since the smaller house was on it's own lot, the city ended up approving, and saying it was conforming. There was some push back from the appraiser, who wanted to disagree with the Head of Planning and Zoning about plats and zoning issues. The bank basically told her, "Hey, just do your job and add the smaller house to the deal." She did, and how did the appraisal change? Came in right at 247.5k, conveniently. 

I am pretty much a newb, this was my second deal and I was just happy to get it, but I've continued to have this nagging thought in my head... If the big house was valued at 218k (with all three lots included), are you telling me that the extra 640sqft of living space in the little house is only worth $29.5k??? Maybe it is, I don't know. I'm living in the little house and it's pretty nice.  What do you think? I'm just hunting for more equity so I can refi and have some cash to put into the next deal. Maybe I'm barking up the wrong tree, and please just tell me that if I am. 

But in my Austin suburb, the average price per square foot is $127, My big house was appraised at $94, then when the value of the little house was added, the overall price per square foot went down to $84. The main home was built in the 60's, so I understand that maybe it's not going to command the same price per square foot as a new(er) build, but in your opinion, is there any reason to consider refinancing and hoping to get a higher appraisal? Even if the new appraisal came in at the $94sqft number that would give me roughly an additional 30k of equity to potentially use for the next deal. 

I'm saving up now for the next one, so either way I'll get it done- just curious if there's more meat on the bone for me here. TIA 

Hi Will,
Make friends with your local bankers and coop folks. This is entirely going to depend on their individual lending criteria, no general answer is going to do it. Good luck!

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