DIY REHAB ARV vs PROFESSIONAL REHAB ARV

[Daniel Kevin Lara]

Now i dont know if the title even makes sense but let me break it down some.

so is there a difference in the ARV when refinancing when you DIY your rehab vs when you hire out contractors who specialize in this field?

cause my question is when you're going to refinance what exactly do the banks look at? Like do they ask for receipts of who did the labor making sure its someone who is certified to do the work etc? Or do they go off of just the upgrades and the updates that you added to the home weather it was done through a contractor or DIY'd?

hope this makes sense and TIA

[Nicole Heasley Beitenman]

Originally posted by @Daniel Kevin Lara:

Originally posted by @Nicole Heasley Beitenman:

I've never heard of a bank asking for receipts in a standard refinance. However, if the appraiser is experienced and knowledgeable, they'll be looking at the quality of the rehab. Now that's a big "if." Appraisers follow the 80/20 rule just like everything else, so most aren't great at their job. But plenty of investors take on rehabs themselves in the beginning.

 Oh wow really? I would of thought that they would check every crevice down to the detail?!

so then its safe to DIY my first project and do ut as good as possible to save myself some money, add value, and potentially get some good profit when i refi correct?

ima look up the 80/20 rule cause i dont even know what that is.

 They might! That's the thing about appraisers--it's the luck (or unluck?) of the draw. 

The 80/20 rule is a general success rule you'll hear occasionally in RE. It's simply a rule of thumb when it comes to success. Let's use RE agents as an example. It's easy to get licensed as an agent, so a lot of people take the test and get licensed. However, it's a very hard job, so you typically see 20% of agents doing 80% of the business in a given market. Most give up, fail, or never even really get started. 

Same goes for appraisers. Probably 20% of appraisers do 80% of the business in a given market. The tough thing about appraisers is you never know who you're going to get, and they can kinda do whatever they want. It's pretty frustrating, because if the appraiser gives a number you disagree with and you ask why, they can just be like, "Because I said so." 

I would do the rehab the way you want, and if the appraisal doesn't go the way you want, have a backup plan.