Refinancing getting 125% of purchase

[Christian Becker]

Buying a deal for cash at $40k in the Midwest.

No remodel, MLS comps at $60k. SFR 3BR 1 BA in B/C neighborhood.

If I wanted to finance out right away, is the appraiser going to look only at the $40k?

Talked with a banker who said the appraiser won't go much higher than the $40k, even if not using a conventional loan. Other lender is willing to go 65% of ARV. Assuming ARV comes in at $60k:

On this example, conventional lender would go 75% of $40k = $30k cash back out.

Other lender would go 65% of $60k = $39k out.

What’s the chance the appraisal comes in at $60k if I bought distressed/wholesale off market? Obviously depends on a lot of factors. Anyone having success or problems with this strategy who would care to share what they’ve found?