Failed to Appraise- Please help

[Eric Hathway]

I have an 11-unit apartment building under contract and my portfolio lender just informed me the appraisal was not good enough to lend upon. She stopped the appraiser before he wrote the report to save costs, but from their conversation, this was not going to appraise for the $640k purchase price. The building definitely cash flows but has 2 really dirty tenants/units that "horrified" the appraiser. My plan was to force them out by increasing the rent and then renovate those units and get a quality tenant in there.

Any advice or am I dead in the water?

[Patrick L.]

Originally posted by @Eric Hathway:

The appraiser said they wouldn't value it higher than "a couple hundred thousand". Which is silly given what it brings in for cash flow and the condition of the structures. New roof, water heater, furnace, siding, and windows.

Debt service coverage ratio 1.67

 Sounds like the appraiser might have been pretty unprofessional in the case.   I'd want to see what comps he's using or if he just pulled a number out of his *** when he decided it wasn't going appraise and didn't do the report.   You need to look at what other sold properties in similar areas and similar condition are going for per unit, it might be that it's way over priced for the area.   I would want a real appraisal done.