Refinance Trouble

Investor · Collierville, TN 38017 · Member since 2017 · 1k+ posts · 746 votes

It definitely sounds like the appraisal came in light based on the scope of work you put into both units and the rent you’re achieving. But before assuming the number is “wrong,” here are the steps I’d walk through (and what I do when running volume BRRRRs):

1. Pull the actual comps the appraiser used.
Don’t rely on hearsay. Look at:

Bed/bath count
Unit count
Condition (fully renovated vs. dated)
Rent roll / market rents
GLA (gross living area)
If they used inferior properties or single-family comps instead of true duplex comps, that’s your first red flag.

2. Build a comp packet and challenge the appraisal.
Appraisers do revise values when presented with clean data. Include:

Before + after renovation photos
Line-item rehab scope
Comparable duplex sales (recent, renovated, within 1 mile ideally)
Actual leases showing $3,650/mo combined
A lot of BRRRR appraisers underestimate turnkey rent-ready units because they aren't used to investors producing those returns.

3. Check the appraisal approach used.
For small multis, the income approach should be weighted heavily.
At $3,650/mo rent, even conservative cap rates often justify a higher value.

4. If the lender allows it, order a second appraisal through a different AMC.
Sometimes the issue isn’t the market, it’s the appraiser.
Just know you may have to pay out-of-pocket and the lender might choose the lower of the two.

5. If timing isn’t critical, consider a delayed refinance.
Waiting 3–6 months while showing stabilized rents sometimes results in significantly better valuations.

6. Don’t terminate the next deal based solely on one low appraisal.
Instead, look at your actual spread:

Your all-in basis: $180K loan + ~$35K rehab = ~$215K
Appraisal: $282K
That’s still solid equity, even if annoying on the cash-out side.

Bottom line:
Yes, the number feels low and based on your rents and renovations, there’s a strong argument for a higher valuation. But your next move should be to challenge this one, not immediately assume you need to walk from the next deal. I've seen appraisals move $15K–$40K when investors send a proper rebuttal packet.

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Kenneth GarrettPro Member

Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes

11mo

@Josh Rushford

Check with your lender on whether you can request another appraisal. I’ve had lenders tell me it’s ok, but then they took the average of the two appraisals. I have challenged an appraisal on the comps they used and provided comps that matched my property. Using a two story home to comp to one story doesn’t work out that well even with the appraiser making additions and subtractions. If you don’t have any 2 units to compare to yours that makes it very subjective and of course neighborhoods, school districts make a difference on appraisals.

Talk to your lender and explore what options you have. When I have an appraiser come out, I make sure I meet them and I provide them my comps, the rehab I did and my projected ARV. It works very well if you are skillful in selecting justifiable comps.

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Scott Chilton

Real Estate Broker · Belmont, MA · Member since 2025 · 150 posts · 65 votes

11mo

Congrats on turning that property into a cash-flowing duplex. You clearly added a lot of value, so it makes sense to question the $282,000 appraisal. Often, appraisers rely on comps that don’t fully capture upgrades like a second unit, new systems, driveway, or added hookups.

Here’s what you can do:

Review the appraisal – Make sure your improvements and income are properly considered.
Request a reconsideration – Submit photos, before/after scope, and rental income to support a higher value.
Consider a second appraisal – Another appraiser with multi-family experience might better capture your value.
Explore alternative funding – Short-term loans, private money, or a partner could cover your next deal if cash-out is short.

The property is already producing income, so don’t give up on your next deal. Proper documentation and a strategic approach usually help get the refinance closer to what you expect.

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Matt Devincenzo

Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes

11mo

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.

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Erik EstradaBusiness Member

Lender · Los Angeles, CA · Member since 2022 · 7k+ posts · 1k+ votes

11mo

Quote from @Josh Rushford:

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!

The rehab cost won't directly impact value if there are no sales to support it. Most appraisers are looking at the last 12 months of sales within a mile radius. A few appraisers will go out a bit if there are no comparables In the area..

You can try to dispute it, but be prepared to justify your reasoning through similar sales in the area. A realtor is going to tell you what you want to hear to secure a listing.. Ask for data to support. The appraiser that is not hired by an independent company is also going to agree with you.

Maybe ask other seasoned investors in the area, to ask for their 2 cents on value... But really it comes down to the data. Appraisers are not contractors.

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Dan H.Pro Member

Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes

11mo

First I am impressed with everything you were able to do for $30k to $40k rehab.

I disagree venminently with the post that indicates income approach has any impact on less than 5 units. I suspect I have near 50 finances of residential MF. I believe every appraisal has included an income approach for reference only. Not one adjusted the value from what the comps indicated based n what the income approach reflected. And they should not. I have seen this same claim about income approach on STRs, but similar to the residential MF, the income approach is only included for reference and not used in setting the value.

Here are some of my thoughts:

- in my market refi appraisals are conservative. I believe if I had an accepted offer at 10% over the refi appraised value, they would use comps to value the property at the accepted price point.

- you do not state the type of area where this property is and what allowed the 2nd unit to be added. Was it an ADU. MF in single family areas get terrible valuations. ADUs often are valued significantly below the hands off costs of the ADU addition.

- I very much agree with @Matt Devincenzo reply that the complaint about the appraisal included what initial value was, cost of rehab, the amazing number of things improved for that rehab cost, but it left out the most important aspect n setting the value, the comps.

- If the comps and/or adjustments are not valid for some reason, you can appeal the appraisal. I have had mixed results appealing appraisals from having my appeal 100% rejected (on real flimsy grounds) to getting an $80k upper on the valuation (which was still an under value).

The post that your basis is between $210k and $220k for an appraised value of $282k means you have done an outstanding job and have sweat equity of at least $62k. you rocked this! Congrats.

Good luck

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Stacy RaskinBusiness Member

Lender · Member since 2022 · 1k+ posts · 533 votes

11mo

Appraisals can vary quite a bit. I've had clients where they had three appraisals done on a property and they have come in with very different values. Depending on the lender, you may not be able to do another appraisal with that lender.

In general, appraisers don't change anything when a reconsideration of value is done.

Also, how long you have waited between the transactions will give you more lending options. Most lenders have seasoning times between when you last purchased and refinanced to when you are refinancing again now. There are generally more options after 6 months and even more after 12 months. There are some lenders who will do a cash out refinance with the new appraised value in less time but you will have less options.

I generally advise investors when they meet with appraisers to have a list of all of the work they did along with the cost of the work. I would also show them the comps you are using. The appraiser doesn't have to use these but in many situations, the appraiser will often look at them. Happy to connect to discuss further.

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Frankie VozziBusiness Member

Member since 2025 · 392 posts · 99 votes

11mo

Hey Josh! First off, congrats on making it to the refinance phase that’s a huge milestone! It does sound like the appraisal came in lower than expected, which can happen sometimes. Here are a few things to consider:

Challenge the Appraisal: If you believe the appraisal doesn’t reflect the true value, you can request a reconsideration with the lender, providing comparables and details of the improvements.

Get a Second Opinion: Another appraisal from a different company might give you a clearer picture and potentially a higher valuation.

Alternative Funding: If the appraisal doesn’t budge, you might explore other lending options or creative financing solutions.

Re-evaluate the Next Deal: If the numbers don’t work out, it might be wise to reassess the next purchase, but hopefully, it won’t come to that!

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Elealeh Fulmaran

Specialist · Member since 2025 · 483 posts · 270 votes

11mo

You've done a ton right—finished the rehab, stabilized both units, and moved to refi. Low appraisals happen. Two quick plays: ask the lender to reconsider with your own comp set and a short improvements list, and if that stalls, request a second appraisal or switch lenders who use a different AMC.

Do you have three nearby renovated duplex comps and a one‑page scope/photos ready to send the appraiser and loan officer?

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Irv ArreolaPro Member

Lender · Los Angeles CA · Member since 2026 · 66 posts · 13 votes

2w

Before you decide on the next deal, ask for the appraiser's comps and check whether any were actual duplexes. With a conversion, the big questions are whether the second unit is permitted and whether there are closed sales of similar duplexes nearby.

If the comps were single family homes, a reconsideration with permit records, leases, and true duplex comps has a better shot. If the comps were fair, a second appraisal probably won't change much. Whether a lender allows a second appraisal or a reconsideration varies by lender, so ask before you pay for one.

I also wouldn't kill the next deal over one number. Look at a partner or a different structure before forcing the cash out.

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Refinance Trouble - HELP!

Refinance Trouble - HELP!

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