How do you deal with appraisals on Section 8 properties?

Question

If I'm looking to do a BRRR on a Section 8 property in Cleveland, how do I deal with the appraisal on these properties? The cash flow is fantastic, but I'm worried about how a bank will view the value of the fixed-up property, since they are only looking at comparables (and not cash flow).

Bob S. · Answer

The appraisal is based on comps, It is 100?% irrelevant if sec 8 or cash tenant,

Tell me the address I will tell you what its worth ,I know every street in Cleveland, or ask your PM they should know as well

Michelle Bateman · Answer

Have you connected with an investor friendly real estate agent in the area? They will likely have good insight into this! LMK if you need a contact.

Patti Robertson · Answer

I agree with @Bob Stevens. Single family home valuations are not based on cashflow, and you don't want them to be. Part of what you are investing in is the asset. That valuation should be what you would be able to sell it for should you need to. Sounds like you fear the valuation is going to come in low, which benefits you as a buyer.

James Wise · Answer

It's going to appraise for what it appraises for so there isn't any reason to worry about it. Beyond doing your renovation you have zero control over the outcome of the appraisal.

John Anderson · Answer

Thanks! Just sent you message.

Patrick Drury · Answer

@John AndersonThe fixed-up value or the ARV - After repair value is based on comparable sales in the area. Look at the sold comps nearby that are the same bed-bath breakdown, similar finishes for what you are going for, and a comparable sq ft.

How do you deal with appraisals on Section 8 properties?

How do you deal with appraisals on Section 8 properties?

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