Cash out re-fi Gone Wrong. Advice needed!

[Chesley White]

So myself and my business partner have run into a situation where we need some advice. We bought a duplex in August of last year in Spartanburg, SC. It's near downtown in a great neighborhood where it's mostly single family homes which are valued around 170k. We purchased the duplex for 77k and put 20k into fixing it up because we planned on holding this property for a while and we wanted it as maintenance free as possible. So we're in for around 97k.

We got our renters in January of this year after fixing it up and it is bringing in $1400/month total. We are now looking to do a cash out re-fi to pull out our cash and move forward purchasing other properties. The first bank we met with wanted us to put the duplex into our personal names instead of the business name so that we could do a residential loan instead of a commercial. They didn't want to do a commercial loan for a duplex basically. So we left that bank and found another who is on board with this type of investment. They said they will do a loan at 80% of the value, 5 year loan w/ a 15 year AM, around 6 % interest. So they ordered an appraisal and it came back at $80k. I was shocked. I'm guessing they compared that duplex with other duplexes in the area because of the type and I'm guessing there aren't that many of them to draw from to increase the value. It's just crazy because if you look at the neighborhood and desirability there's definitely value there. The house right behind it that you can see from the backyard is a McMansion worth probably half a million easily.

Taxable value is around 100k. Houses on that same street are in the 170s, and we purchased it and self-appreciated it to the high 90s, but we're getting a value of 80. Talk about a let down.

We can always sell it and probably make a good profit doing that, but I would rather keep it because it's producing such good income right now compared to the estimated debt service that we would be repaying if we could get a loan.

My question is does anybody else have any other ideas for pulling our cash out and getting as much as possible so that we can move on to other projects?

I am hesitant now of appraisals because they seem to really dictate everything and this one seems so subjective.