Why So Many BRRRR Appraisals Are Coming in Low Right Now

Question

I’ve been seeing a lot more BRRRR investors surprised at the refinance stage lately — not because the rehab went poorly, but because the appraisal didn’t hit expectations.

And it’s happening even on solid projects.

What’s different right now

Appraisers are leaning heavily on conservative comps and in-place rents.

ARVs that penciled a year ago don’t always hold up in today’s environment, especially if:

• The rehab outpaced the surrounding comps
• Rents aren’t fully stabilized yet
• The property is one of the nicer ones on the block

The investors still executing BRRRRs successfully are adjusting early:

• Using tighter ARV assumptions
• Leaving more margin in the deal
• Planning refis based on realistic, not optimistic, appraisals

BRRRR still works — but the buffer matters more than it used to.

For those running BRRRRs right now — has the appraisal been the biggest wildcard for you, or is something else slowing deals down?

Frank Pyle · Answer

Low refi appraisals are real right now and the easiest fix is to underwrite the refi like you are going to get a conservative as is value plus maybe half the improvements, then treat any upside as a bonus. If your ARV is based on retail flip comps but the block is still mostly dated, the appraiser is going to drag you back to the neighborhood average and the bank will lean on in place rent too. Quick checkpoint I use is if the deal still works at 10 to 15 percent under your ARV and you can show a tight scope plus before and after photos and at least three comps that match bed bath and distance, you are in a safer zone. One actionable step today is to build an appraisal packet before the refi with your scope, receipts, photos, rent comps, and the three best comps you want them to use so you control the narrative. Are you seeing this more on the nicer house on a rough block problem or on rent based DSCR refis where the lease up is not fully seasoned yet?

Alfath Ahmed · Answer

Appraisers have been conservative but if you buy correctly and renovate the project with better finishes and can prove to the appraiser that your subject property is nicer than the comps that hold the value you are trying to achieve then you will certainly attain your values.

- provide appraisers with rental and sales cops

- give them lease agreements

- Provide a list of improvement you did to the property

- Give the appraisal report from your inital purchase (showing ARV if you got the value) when you bought the deal with hard-money.

- Provide photos & video walkthrough of the home

Ask the appraiser if there is anything else that he would like? Be nice, courteous, and answer all his questions truthfully and timely and give evidence. That is how you do a complete brrrr finish off.

Kenneth Garrett · Answer

Appraisals have always been tricky.  For a while when you bought a property and were financing it, the appraisal always seemed to come out about the same value.  I call that irony.

When using the BRRRR method, I always provide a list of the improvements made, the cost of the improvements, the comps I pulled and my estimated ARV.  I provide this to the appraiser.  I’ve had great success in this method on getting the value I was looking for.

Always, if you can meet with the appraiser and provide them a one page sheet with the above information.  Tell them this is what you do, rehab properties and rent them out, and refinance them.  Try to build a connection with them.

Pierre Guirguis · Answer

Low appraisals are showing up more frequently right now, and the problem usually isn’t the appraisal itself, it’s the assumptions going into the refi.

Right now appraisers are anchoring hard to in-place rents, closed comps, and neighborhood-level context. Even a great rehab can get capped if it’s materially nicer than surrounding stock or if rents haven’t seasoned yet.

The BRRRRs that are still working tend to share a few traits:

• Basis is low enough that they don’t need a perfect appraisal
• Value-add is incremental, not transformative for the block
• Refi timing is flexible, sometimes waiting for stabilization or a bit of rent history

Where people get hurt is underwriting the refi like a best-case exit instead of a conservative checkpoint. The strategy still works, but it’s a lot less forgiving than it was 18–24 months ago.

Gabe Ayoroa · Answer

Is this situation ( low refi appraisals) happening in Cleveland as well? Anyone with actual recent experience?

Alex Morales · Answer

Great breakdown, William. The appraisal gap has definitely become the biggest wildcard in BRRRR deals right now.

A few things I've started doing to minimize surprises at the refi stage:

1. **Run your own comp analysis before buying** - Don't trust wholesaler ARVs or even agent CMAs blindly. Pull sold comps from the last 90 days within 0.5 miles, match bed/bath/sqft, and actually look at condition from photos. I use Redfin directly and also run properties through PropLab to cross-check the AI-adjusted comps. Having two sources gives me more confidence.

2. **Assume the appraiser will use the lowest reasonable comp** - If your range is $280k-$320k, model your BRRRR at $280k. If it still works at that number, you're safe.

3. **Document everything during rehab** - Photos, receipts, permits. Some lenders will let you provide a rehab summary to the appraiser which can help justify the value increase.

4. **Talk to your refi lender BEFORE you close on the purchase** - They can often tell you what seasoning period they require and whether they do "as-repaired" appraisals vs "as-is."

The market is definitely more conservative right now, but deals still work if you're building in that extra 10-15% cushion on ARV from the start.

What markets are you seeing the biggest appraisal gaps in?

Alan Asriants · Answer

There has been a lot of fraud and misinformed data that has been actually inflating the value of some real estate in the Philadelphia area. Philadelphia zoo very block by block. Neighborhood and appraisers were taking comps from half a mile out that would cause the value of the property to go up substantially. Lenders will take the appraisal at face value and land based on that amount however, if those people went and tried to sell on the market for the same value that it appraise, for they would be very upset by the result. Many lenders have actually left the Philadelphia area due to this issue and some other fraudulent scams going around. I think Appraiser's are just being a little bit tight on certain class of Real Estate.

Chris Seveney · Answer

same in baltimore and now we are hearing memphis as well. A lot of fraud going on and lenders are paying a lot more attention to appraisals as the appraisers are under a micropscope.

Why So Many BRRRR Appraisals Are Coming in Low Right Now

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