How Do Lenders Get Renovation Numbers

[Will Carbonell]

Hey Guys,

I'm getting into real estate investing by looking into multi-family rental properties. There are some properties I am interested in, but when I have spoken to the bank they are hesitant in those properties due to renovation costs. For example a property in a historic neighborhood which costs $350,000, the bank is worried about a renovation that would potentially cost $100,000. I emailed the banker this evening and they emailed me soon after with that cost estimate. My question is how does the banker know this cost right away? If I bring out a contractor to give me an estimate for the cost of the work, and it turns out to be less than the 100K, would the bank be swayed by this? The real estate agent also had concern about the properties that needed some renovation cost. The topic of FHA loans came up even though we discussed that a conventional loan would be the better route for me. Any help would be appreciated.

Will