Updated about 1 month ago on . Most recent reply
Refinance Trouble - HELP!
PLEASE READ, I NEED HELP.
I made it to the refinance phase of the BRRRR method (this is my first rental property) and I'm in contract to buy the next property. I owe $180,000 on this property and it appraiser for $250,000 when I bought it in May (bought it for $225,000). I put about $30,000 - $40,000 into it in rehab. It was listed as a single family when I bought it and now lists as a duplex. I completely remodeled one of the units (it was in complete disarray when I bought it). New floors, new paint on everything, new kitchen and bathroom, all new windows. All new plumbing and mostly new electrical and the stairs leading up to that unit is all brand new. Brand new Rinni heater too (there was a broken oil furnace there before). Added washer and dryer hook-ups and installed the machines. Also added a driveway for this unit and completely re-did and expanded the driveway for the other unit.
Some work to the other unit was done but not much. Mainly, added a wall to officially make it a two bedroom, added two hardwood doors on the bedroom, a closet door, propane stand-alone heat stove (all it had for heat before was a mini-split which is still there), and added some new paint. Also added mailboxes for box units and new water heaters for both units (plus a new electric meter for the other unit and internet hookup).
Apt A (two beroom, one 3/4 bath) rents for $2200 and is occupied.
Apt B (one bedroom, one full bath) rents for $1450 and is occupied.
The problem I'm facing is with the refinance. The appraisal came in at $282,000. This seems impossibly low to me and everyone I've talked to about it, including my agent and another appraiser (off the record) agrees. This will only give me back $16,000 after the refinance and the down payment for the next property is $42,000.
I'm wondering what yall's option is. Do you think that appraisal makes sense based off what I just told you? Should I get another appraisal with a different company? Seek alternative funding? Or simply accept defeat and terminate the next deal (though, I really don't want to do this). Any thoughts and words of advice will be greatly appreciated!
Most Popular Reply
I'm going to disagree with the above poster(s)...I don't think anything of the appraisal positive or negative based on what you shared. I think it sounds like you spent quite a bit on rehab, but you didn't share the actual property value other than what you paid. Maybe $280K is on the money for a duplex, maybe it's way over, maybe way under. Just telling us the SOW you completed says nothing for the value...I can go buy a $10K crack house and put $150K into it for a $90K ARV as long as I have cash to do it.
So what do actual recent sold comps tell you the value of a duplex in the area is? What did the comps tell you about value of a duplex would be when you originally purchased? Has it trended up or down? Answer those questions, and then I can form an opinion about the appraisal from that info.