Refinance SFR in Milwaukee with great cash flow but low appraisal

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Refinance SFR in Milwaukee with great cash flow but low appraisal

Michael Lange
Madison, WI · Member since 2016 · 6 posts · 4 votes
Hello BP members. I'm looking for advice on how to refinance a SFH in Milwaukee. I purchased the property for 65K, but the most recent appraisal came back at 45K due to so many foreclosures in the neighborhood. The cash on cash return is around 11%, The property has been fully rehabbed and I've had tenants in place since April, under professional property management. I'm looking to continue growing my portfolio, but I need to pull as much capital out of this property as I can. Are there any lenders out there who will lend solely on cash flow?
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Harjeet BhattiPro Member
Lender · Glenview IL- CDLP NMLS#230554 · Member since 2015 · 2k+ posts · 747 votes
9y

Generally appriser do not use all the foreclosure comps. There must be some regular sale comps also. Have you challenge the appriser if you or your agent has some other comps? 

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  • Harjeet BhattiPro Member
    Lender · Glenview IL- CDLP NMLS#230554 · Member since 2015 · 2k+ posts · 747 votes
    9y

    Generally appriser do not use all the foreclosure comps. There must be some regular sale comps also. Have you challenge the appriser if you or your agent has some other comps? 

    1Reply
  • Jim Peret
    Investor · Delafield, WI · Member since 2014 · 102 posts · 73 votes
    9y

    Micheal,

    I can't help on lenders. But care to share your property management company and if your happy with them?  And where are all these foreclosures?

    0Reply
  • Michael Henry
    Real Estate Consultant · Brookfield, WI · Member since 2014 · 873 posts · 350 votes
    9y

    @Michael Lange I'm interested to know the location of the property you purchased. Did you put any money into it for forced appreciation? Please share with us if you are able to find a lender.  

    0Reply
  • Michael Lange
    OP
    Madison, WI · Member since 2016 · 6 posts · 4 votes
    9y
    Michael Henry The property I purchased is in the Lincoln Park neighborhood on the northside. It's right off the Lincoln creek parkway. It's 2/1 810 ft.². I paid 39K for the property put in 23k in rehab so I have about 63k Allin. It rents for 900 a month. My appraisal came in at 45k after providing the appraiser. Scope of work and comps we used value the property. The biggest issue was foreclosures and lack of comps. I feel 65k is fair based on the cash flow, but I'm just trying to figure out what my next next step will be.
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  • Rebecca KnoxBusiness Member
    Specialist · Milwaukee, WI · Member since 2014 · 1k+ posts · 1k+ votes
    9y

    I sent you a PM @Michael Lange. We have done several deals in that area and have another one that will be under contract tomorrow.  For a 2-bdrm, it feels like the purchase price was a little high but that's just my opinion. 

    I can send you some referrals of lenders but what lenders have you already reached out to? 

    Captain Save-A-Home LLC
    WebsiteView Page
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  • Shawn AckermanPro Member
    Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
    9y

    @Michael Lange did you purchase the property as an REO? Sorry to hear about your experience.

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  • Michael Henry
    Real Estate Consultant · Brookfield, WI · Member since 2014 · 873 posts · 350 votes
    9y

    @Michael Lange I agree with @Rebecca Knox I think you paid too much. There is a lot of help on BP to be overpaying. With that being said, I did a quick search on MLS and came up to two properties.  Are these the ones that you found? If so, I would try a different bank because appraisals are very subjective. 

    Good luck

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  • Ramon Jenkins
    Real Estate Agent · Milwaukee County, WI · Member since 2009 · 3k+ posts · 525 votes
    9y

    I’m 3rd that you may be paid too much from the start.

    2 bedrooms in C areas all in maximum $44,000 is a nice appraisal.

    If the tenant stays for at least 3 or more years at $900 a month would be sweet.

    Most I have seen has been $785 per month for 2 bedrooms in c areas.

    1Reply
  • Bob E.
    Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes
    9y

    @Jim Peret   We have a good Property Manager in Milwaukee, send me a PM and I will send you their info.

    @Ramon Jenkins  are you doing sales or PM these days?

    0Reply
  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    9y

    I think $45,000 is a good price for a 2/1 on the NW side of Milwaukee, if it's newly rehabbed.  Rents I see usually for 2 bedrooms are between $750-$850 depending on size and amenities. If you're getting $900/month that's really good rent; it's basically low end for a 3/1.

    However, $65,000 is a better price for a 3/1 completely rehabbed.  I think you got all-in at too much for that price.

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  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    9y
    Originally posted by @Ramon Jenkins:

    Most I have seen has been $785 per month for 2 bedrooms in c areas.

    I will have to slightly disagree there; I have a couple 2-bedroom houses. One rents for $795/month and the other $820/month, with tenants paying all utilities and taking care of grass/snow. I'm rehabbing another 2 bedroom and it will rent for $795/month. The tenants will supply their own appliances.

    Podcast Guest on Show #29
    1Reply
  • Ramon Jenkins
    Real Estate Agent · Milwaukee County, WI · Member since 2009 · 3k+ posts · 525 votes
    9y

    Per Dawn statement : sounds like I need to start working on rent increasing in 2018

    @Bob E.  I have been performing a mixture of both sales and limited property management in 2017.

    About 13 months ago : I was property managing about 35 – 38 doors

    Now I’m down to about 16 doors.

    Property mgmt doors decrease has allowed me more time for my

    own personal improvements.

    ( More sleep , less time in the automotive shops for vehicles repairs )

    1Reply
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