Would raising the rent by $200 help getting a higher appraisal?

Question

Hello! I was wondering if raising the rent would help getting a better appraisal value when times comes to cash out / refi your investment property.

If I was to charge $200/month more, would it make any difference?

Thank you

Todd Rasmussen · Answer

@Kevin DieselCommercial appraisal based on NOI, yes.

Residential appraisal based on sales comps, no.

Wayne Brooks · Answer

No, 1-4 units are appraised based on comparable sales, not income.

Cj Powderhorn · Answer

I agree that it won't change the appraisal.  However, if you are selling, it may increase your sales price. I've been looking at listing a few properties for sale thru RoofStock and the rent definitely has an impact on the sales price. Most of mine are rented at an undervalue rate (but have tenants that pay of 5+ years). I like their system for sellers but will probably have to wait until I have a tenant turnover.  I know this is slightly off topic, but I do believe sales price must be tied to rent for most people!

Steve Morris · Answer

I don't think it'd affect the appraisal since even the comm ones look mostly at comp sales.

It would affect the DCR/DSCR though and you'd make more money - Just do it!

Joe Splitrock · Answer

No effect on the appraisal, but if you can raise the rent, do it regardless.

Todd Rasmussen · Answer

So you are getting a residential appraisal based on sales comps in your area. Your operating income won't have an impact so the rental rate doesn't matter.

Kevin Diesel · Answer

@Todd Rasmussen

Hey Todd, so it’s an investment property , a single family home that I bought back in august and right now I’m renting it out for $950 a month.

Kevin Diesel · Answer

@Kyle J.

Sorry , I should have made that clear. It’s an investment property. ‘My first one actually that I bought back in August.

Kyle J. · Answer

@Kevin Diesel  What kind of property are you referring to?  I get the impression it's a single family house.  If so, no - raising the rent is not going to result in you getting a better/higher appraisal.  The appraiser is going to value the property based on recently sold comparable properties in the area.  Not what you're charging in rent.  Again, this is assuming this is a residential single family house type property.  If, on the other hand this is an apartment complex, my answer would be different.  But I'm guessing that's not what you're talking about.

Would raising the rent by $200 help getting a higher appraisal?

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