bank offering less money than expected

[Sheena Drake]

Looking for opinions.........2/1 SFH in Missouri. Bought for $33,500, B/C neighborhood. We have rentals in this same area so expecting $750-800 rent. Taxes, insurance $1000 together for the year. Nicely fenced in with shed but no true garage. dilemma.......Our bank has just recently moved to loan of 75% LTV for acquired cost + anticipated rehab cost. cannot refinance until owned for 1 year. If we were to do the right thing (rip out drywall where window units have leaked, tear out the chimney that was a past problem but could be in future) we would anticipate $25,000 approximately in rehab cost. Experience tells me the bank analyst will show up, look at the house for 5 minutes, give current appraisel (with anticipated rehab) at exactly $58,500. So what will be offered from bank leaves us with a substantial gap that will come off our personal HELOC>

I personally see the value in doing things the right way, as we are buy and hold. Much easier now while vacant. Should ease the risk for capital expenditures in next 5 yrs minimum. ANd the monies not going toward the bank loan could be applied to our HELOC, so that we still have a renter paying down this cost. I feel fix it now is better than fix it later. If we were in the mode to sell quickly without reaping a gain over next 10-15 years for appreciation then I would forgo that much improvement. But longevity is my target. What would you do? Scale back to the $43,875 the bank will give and leave it or fix it and hopefully do nothing but babysit it for 10+yrs?