Financing for property that won’t appraise?

Question

I’m looking to buy and put an unusual property type but my bank says that it won’t be able to be appraised due to a lack of comps in the area. I don’t want to pay hard money rates (I get 3% from my bank on properties) so what are my options. Any ideas aside from using my own money?

Colleen F. · Answer

@Ariel Haas  is this a property that can appraise based on an income approach?   Do you have another bank option?  Try another lender.  Seller financing?

Colleen F. · Answer

@Ariel Haas  do you want to tell us what makes this an unusual property?    Also are there no comps because it is not a very dense area?

Colleen F. · Answer

@Ariel Haas  so a STR cabin would be comparable even if it is not the same material and doesn't show the same cash flow. The issue would be it may appraise lower then you want.  You might want to talk to someone who does lending on a lot of STR's because I am pretty sure cash flow is key in financing for dedicated STR.

Ariel Haas · Answer

I would be using cash to buy land and build a glass house for str in the woods. There is nothing like it within miles of the locations I’m considering so banker said I could get stuck footing the bill when I try to refi even if I’m showing positive cash flow from the property.

Reid Chauvin · Answer

'Unusual' properties are risky because they are hard to resell, especially in a pinch. Surely you can find someone who can perform an appraisal on it, but would recommend thinking hard about the risk vs reward of this property.

Brendon K. · Answer

Depending on your method, I'd steer clear of this direction. If your core four isn't at least intact you're going to have a rough time. It's not going to be repeatable.

Financing for property that won’t appraise?

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