What data will an appraiser use for a re-positioned apartment?

Question

What time period (or data source) will an appraiser use for the gross rents (and expenses) of a recently re-positioned apartment community (T-3, current rent roll, near future rent roll, etc.)?

The re-appraisal will be used by my bank to cross-collateralize the re-positioned apartment with some of my other rentals for a commercial line of credit.  I would like to time the appraisal to maximize value (but also not have to wait until every last unit has been turned and rent raised).  I asked my commercial lender and he was unable to help.  Thanks in advance for the assistance.

Mike

Michael Le · Answer

Freddie appraiser just finished on my loan and also used T3

Brent Shryock · Answer

Just talked to a client of mine (who happens to be a multi-family appraiser), he indicated that he could take the T3 (especially with Bank Financing) and normalize new income and expenses and come up with a new higher value.   They still will be looking at comps, etc.... but they can justify a new value if the new numbers support the value.

Brent Shryock · Answer

I have seen in the past 12 months being a magical seasoning number.

Brent Shryock · Answer

What type of seasoning do you have with the repositioned Apartments?  To get a substantial bump in value you will need a good track record of increased rents and increased NOI.

Mike Dymski · Answer

I just got off the phone with the original appraiser and he said exactly the same...T3.

There are obviously ways to perform an 'as complete' value appraisal but I do not have enough comfort with my lender in how they will manage that process.  They have underwritten the line of credit and provided a term sheet but their underwriting may not align with the appraisers requirements and standards, if the bank does not communicate well with the appraiser.  I get good answers when they come from the bank president...less so with my point of contact.

I will go back to them and let them know the appraisers recommended T3 and see what they come back with.  They are pushing the loan; so, maybe they will come back with a solution to expedite the process.  Thanks for the help.

Mike Dymski · Answer

Thanks @Brent Shryock.  I am vaguely familiar with the Fannie and Freddie seasoning requirements (12 months = no refi, 13-24 months = 90-95% of LTC, >24 months = 130% possible).  My lender is not concerned with seasoning.

My question revolves around what the appraiser will use to value the property rather than what the lender will use for LTV  proceeds.  Let me know if I am looking at this correctly and if appraisers are required or will use 12 months of stabilized history (or some other period).

What data will an appraiser use for a re-positioned apartment?

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