New to the game need advise

[Courtney Joseph]

I purchased rental property in an up and coming area in Buffalo using the BRRR strategy. However, when I went to refinance the property would only yield me a 5K return. I'm not getting back my initial investment. I have upgraded this property by adding new windows new boiler new furnace new carpet siding painting the outside. The rent at the time of take over was 550 and now the tenant is paying 700. Aug starts a new lease the tenant wants to stay and the rent will be going up to 845 (market rate).

Had the property appraised again and due to the fact of the other properties in the are have not sold above 70K my I cannot pull the funds from my property, even though Zillow is showing my estimate is now 65K.

I need some good sound advice so i can move on to buying more property.

[David Whartnaby]

Courtney Joseph The numbers refer to how much did you pay for the property. What loan to value is the bank willing to work with. The numbers refer to all of the $ involved in the deal.

From an appraisal standpoint, I can give you a couple of thoughts:

1) If the appraiser determines that the highest and best use of the property is a single family residence and not a rental, I am not sure what your best course of action may be. However, by increasing your rent, if the best use of your property is deemed to be a rental unit (and not a single family residence) then the value of the property will increase. If the opposite is true, then the increase in rent will be deemed irrelevant. An appraiser though determines value by the day that they inspect the property (generally). So, the original appraisal probably does not factor in the increase in rent for August.

So, I would ask you... if you were to sell the property for the highest amount possible, who is most likely to buy it? A family to live in it or an investor who wants to use it as an income generating property?

If the answer is an investor, then I would recommend waiting til August 1st with a new signed lease in hand. If not, I am not sure what would be the best route.

2) Zillow is not always accurate. Not saying you are wrong about the 65k value but just something to consider...

Good luck!