Property appraised for less than anticipated

[Jessica M.]

Hi All,

My husband and I are partnering up with another investor and are about to take on one of our first deals, besides renting out our primary residence. We are purchasing a townhome in an urban area. The agreed purchase price is 115k. The property appraised for 190k. We are using a HML, which will only give us 65% of appraised value, which is about 123k. We are trying to limit any out of pocket investments to minimize our risks. The property next door, fully renovated, just sold for 220k.

It would cost about 40k to make our property look as good. In your opinion, would you:

A. use the 8,500 dollars to do light Reno's and rent it out for a year. Have it reappraised, hoping the market price increases more, then do the larger renovation?

B. Suck it up and come out of pocket for full renovations then sell and cash out?

I welcome all advice! Thank you!

Thank you!