Can I do this? Note/refi advice.

6 Replies

Hi

I have a four plex in Ohio its net profit is around 17k a year. I'm currently trying to refi/cash out . The problem I'm having is since it's a four plex it gets appraised as a residential property.  Therefore the appraisal is all based on comps and not cap rate etc and the other house in this area all being sold for less (my property had extensive rehab done to all four units). 

What can I do to get as much cash out for this property?  Anyway to make a note  and sell that? All advice is welcome. 

Thanks

@Noam Adler  

For residential financing they are going to be based on comps. Maybe challenging the appraisal with the extention of the renovations done? The appraisal should have the income approach on the report, as well. If there are no comparable comps, this approach can be used. It is determined by the appraiser, which approach is best to use for the market. Unfortunately, no lenders are able to choose appraisers, but an investor friendly loan officer should know how to make this challenge. 

Originally posted by @Noam Adler :

Hi

I have a four plex in Ohio its net profit is around 17k a year. I'm currently trying to refi/cash out . The problem I'm having is since it's a four plex it gets appraised as a residential property.  Therefore the appraisal is all based on comps and not cap rate etc and the other house in this area all being sold for less (my property had extensive rehab done to all four units). 

What can I do to get as much cash out for this property?  Anyway to make a note  and sell that? All advice is welcome. 

Thanks

If the property is going to be considered an overimprovement  for the area, you will end up having more money into the project than the 4 unit is worth.  Fortunately, you're in good shape with the yearly net profit.

You won't get a lender to take the  income approach for a 4 unit and challenging the appraisal will only lead to frustration.  You might get them to budge a little, but it's doubtful.  I'm usually a more optimistic person, but when dealing with this subject, the outcome is usually not one that's full of sunshine and lollipops. 

@Noam Adler  - you mentioned that the property would be appraised as a residential property.  Are you discussing the refi with the residential side of the house or the commercial / business services side?

Originally posted by @Shavar G. :

@Noam Adler  - you mentioned that the property would be appraised as a residential property.  Are you discussing the refi with the residential side of the house or the commercial / business services side?

Commercial 

Originally posted by @Noam Adler :
Originally posted by @Shavar Golden:

@Noam Adler  - you mentioned that the property would be appraised as a residential property.  Are you discussing the refi with the residential side of the house or the commercial / business services side?

Commercial 

 Unless it's zoned commercial and can accommodate a storefront, you're barking up the wrong tree.  It's a residential property and will be appraised like a residential property.