Refinancing after a BRRR

[Victoria Spagnolo]

Hi all! I desparately need some advice here. I am a new investor so please be honest but kind!

I got a personal loan of $50k from a family member for a deal I simply could not pass up (student housing where I can rent by the room and where the cash flow is pretty substantial!). I used about $39k for the downpayment and the remainder for renovations. I was encouraged by another investor to go ahead with the deal with a DSCR loan (great idea!), make some renovations (definitely needed), and then simply refinance to pay the loan back (not so simple as he made it seem). Here is the issue. The renovations were done to the basement (or better describes as lower level? the house is on a hill so it is considered the lower level from one side of the house and the first floor on another). There we fitted out another "bedroom." We also semi-finished this lower level. Prior to the renovations, there was mold along the walls and on the stairs, unfinished walls, and hardly any eletronic (and definitely no heat). We cured all the mold, installed outlets and lighting, and added heat.

I am worried I over estimated the ARV. Since the renovations were done to the lower level, I don't know if the 5th room would qualify as an actual "bedroom." It is probably more appropriately categorized as a bonus room. Therefore, I don't know how much these renovations will help during the appraisal when I go to refinance.

The house was purchased for $195k. It's difficult to find comps in the area as the houses vary by block. Most of the surrounding houses are duplexes (and used for student housing) while this is single family home. At the appraisal conducted before closing, the house was appraised for $200,000. After the renovations, I think it could appraise for $215k, but this is almost entirely a guess. As I mentioned, it is hard to find comps in the area. 

What are your thoughts? How can I repay the loan back as quickly as possible? The loan is from a family member and so she is a bit flexible, but I want to promptly pay her back. 

Thank you in advance. 

[Matthew Crivelli]

Below grade renovations / square footage do not yield the same per square foot price as above grade. For example, I bought a 5/3 split level for 525k that's 3,000 Sqft. (1.6k above ground 1.4k below grade) The appraiser calculated our GLA at 1,600 sqft & only added 30k in value for the 1,400 sqft finished basement, which includes 2 bedrooms, 1 full bath, and a second kitchen. 

The only real way to know what your ARV will be with a DSCR loan is to pull the trigger, open the loan file, and get the appraisal ordered.