How do you prepare for a refinance to maximize value?

Question

Hey everyone,

I’m preparing for a refinance on a small portfolio of duplexes/triplexes in Cleveland and I wanted to figure out if there are any things you do to prepare for the appraisal.

We executed a pretty standard value-add plan, light renovations, improved tenant base, and brought rents closer to market. The properties are now stabilized, but I want to make sure I’m not leaving money on the table going into the refi.

Appreciate any help here!

Kenneth Garrett · Answer

@Golan Corshidi

I always meet with the appraiser face to face.

1. Hand them a one page sheet of comps, current rents and updates completed.

2. I don’t want them to use market rent.  I want actual rent.  Since the building is updated the rents are higher than market.

3. I give them my ARV calculation.  It is based on real comps.

4. I try to build a quick relationship with them. I want them to know this is my business.  I buy distressed properties and improve them forcing the appreciation.  I am a BRRRR investor.

5. Many times they share with me they are an investor as well or it’s nice to meet some who knows what they are doing.

6. This method works.

Bill B. · Answer

Ask your lender what type of appraisal they’re going to do first. Is it income based or simply comp-based because it’s 4 units or less. Sometimes they’ll run both but then they can also tell you which is usually higher. If they on,y do comps, or they do both and comps are “always” higher, then rental income/history “doesn't matter”. (Meaning, barring any obvious red flags.)

Pierre Guirguis · Answer

You already did the hard part, renovate, stabilize, raise rents. Now it’s about controlling how the deal shows up to the appraiser and lender.

If your new rents are recent, that’s where deals get haircut. Appraisers get nervous if it looks “fresh.” If you can show even 2–3 months of collections at the new levels, that alone can swing value more than people think.

Bring your own comps. Actual recent 2–4 unit sales that support your rent and condition. If you don’t control the narrative, the appraiser will, and that’s where people get blindsided. Clean financials matter more than upgrades. A tight T12 + rent roll that clearly shows in-place income is what lenders size off. If it’s messy or inconsistent, you’ll feel it in proceeds.

Also, small stuff kills value. Unfinished units, vacancy during inspection, minor deferred maintenance, that’s the kind of thing that chips away at your number even if the big picture is solid.

Golan Corshidi · Answer

Makes sense. Yeah we want to get this done in the next 45 days so probably just going to keep them but good to keep in mind for future refi's. Thanks again.

Pierre Guirguis · Answer

It depends on timing more than anything. If you’re close to the refi, I’d lean toward keeping the stable tenants. Lenders and appraisers put a lot of weight on in-place income, and a clean, consistent rent roll usually beats “projected” higher rents. If you start turning units, create vacancy, or have brand new leases right before appraisal, it can actually introduce more uncertainty than upside.

If you have a bit of runway, then yes, pushing rents closer to market makes sense, just want a couple months of collections at those new levels so it looks real, not transitional. So it’s less about max rent and more about how credible and seasoned that rent looks on paper when the deal gets underwritten.

Golan Corshidi · Answer

Thank you for this Pierre!

Some of our units have great rental history, but slightly below market (10%-20%). Would you recommend trying to get these rents up with new tenants or do you think the stability will be better?

Golan Corshidi · Answer

thank you! this is really helpful. I appreciate it.

Drew Sygit · Answer

Pull your own comps and try to meet appraiser at properties.

How do you prepare for a refinance to maximize value?

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