Confidence in ARV and refinance

3 Replies

Today I went to look at my first rental investment property. I am hoping to BRRRR. It is a cash flowing 2 unit multifamily building.

The rent is $700 + $700 = $1400.

I've estimated NOI to be around $11,000. Cost is $85000 purchase + $15000 repair =$100,000.

I'm guessing ARV might be $130,000.

My question is....

How do I confidently come up with the ARV. And this being my first purchase, how can I be confident that a bank will refinance me the 75% of ARV?

Can anyone help me comp and figure out if this is a good move?

When you do the purchase, get an appraisal for as-is and ARV. it's around $400, which if you're using a lender most will require this appraisal. You can be confident that you can get a refinance if you're credit score is at least 680. (I'm with Haus Lending and this is our bread and butter in what we lend, and it's industry standard today for most lenders to require atleast 680 credit on rentals).

@Slade Sizemore , as there other rehabbed duplexes that sold within 1/2 mile of yours within the last 6 months for $130k.  Are they comparable size, amenities, rent levels?  If so, you have your comps already.  If not, look at the other duplexes that have sold.  If they are selling for less than yours, what makes yours better?  Bigger units, newly updated, more rent, bigger lot, etc.

Ask the agent that is listing the property, or your agent what comps are. You can be very confident in your ARV if there are a lot of transactions around you supporting your value. If there are no comps, then you need to account for this uncertainty.

@Slade Sizemore- As mentioned above, Great advice. As a Private Lender I would add, based on the Appraisal/ARV as it pertains to the Current "as-is" Condition (C1-New Construction thru C5-Requires significant repairs) of the property to the Expected "as repaired" condition of the property.The footprint of the property is absolutely essential as stated above, closely reviewing the interior/exterior pictures in addition, will help you fine tune your ARV value based on the improvements your planning compared to the Improvements done to the comparable(s). Going from a C4/C5 to C4/C3 could get you the better ROI.