Rental Property Financing. Should I bring Comps to the lender?

Question

Stephanie Medellin · Answer

@Vincent Pelletier I suppose it couldn't hurt, but it's really not necessary. Lenders and loan officers can easily pull comps to get an idea of property value. Does your property have unique features not typical in your market or is it recently renovated? If so, you should mention those things.

The lender doesn't determine the value, the appraiser will ultimately give their opinion of value.

Jason D. Lewis · Answer

@Vincent Pelletier

You should connect with a strong investor friendly mortgage broker.  All big banks have different lending criteria's, so they wont submit your deal where it doesn't belong.  Second, they can utilize a "friendly" appraiser who will help with the lending value.

If you work with a smart broker, they will guide you through the whole process.  There are so many small details that can impact your deal that you want independent eyes reviewing the details, prior to the bank vetting anything.

Just like RE agents, you should look to work with a Mortgage broker who is also an active investor.

Jason Lewis

Chris Mason · Answer

Not crazy to do.

What I do when a borrower shows me comps: offer tips if necessary, and tell them to present it to the appraiser when he shows up. The appraiser is really the person who would/could use this info.

I recently did a refinance, and the value came in to the dollar down to what I anticipated.

Theo Hicks · Answer

Hi Vincent,

I've had a friend provide comps to the appraiser, because the comps they used didn't make much sense, and he was able to get a slightly higher appraised value. Of course, your comps need to make sense and there is no guarantee that they will use them.

Edison Reis · Answer

My experience in Canada is that comps are nice to have (for your own due diligence) but the chartered banks won’t care too much as they will ask for a formal appraisal with one of their own appraisers.

They are the ones holding the cash so is normal to do so

Cheers

Edison

Dennis Dahlberg · Answer

Don't waist our time doing this.. they will do an appraisal.

What they are really going to need to see as

• lease agreements, 
• your bank statements show the income and
• your credit.

Loan amount is going to be based on total rental income.

Rental Property Financing. Should I bring Comps to the lender?

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