BRRR Appraisal Question

[Nick Causa]

Wanted to run this by someone. Disclaimer: We’re new to this and I’m well aware we more than likely screwed ourselves so no need to kick us while we’re down haha: My wife and I are in the appraisal portion of our live-in BRRRR. In June 2018 we bought an updown duplex for $625,000 ($289/square foot) with a 3.5% FHA out of a HELOC from our previous primary residence. The duplex appraised at that time at $660,000k ($306/square foot). After the pain free $200k renovation process (sarcasm laid on thick here) which included gutting one of the units, adding a bedroom, bathroom and 305 square feet and upgrading the other unit cosmetically. This almost doubled both of the rents on the two units bringing it from $3500 to a now $6000/month. So after 2 years of living through this (2 years where the local market is appreciating by the way) we just got the house reapprasied for our “Refinance” portion of our BRRRR and it came out to $735,000 ($298/square foot with the new square footage included). I had to scoop my jaw off the ground. I looked at the comps in the appraisal and they’re all not up to the same condition as our newly renovated house and theyre all listed as “good” condition when theyre clearly in disrepair and ours is just updated. I’m assuming this is because we now have the “nicest house on the block” problem and priced ourselves out of the market? I know these things arent a finely tuned science but something here doesnt add up no? How could we have gone from $305/square foot to $298 after all of those upgrades and in the middle of an appreciating market. Were appealing the appraisal but i dont see this appraisal now coming out anywhere near where we need. Im guessing were a product of “youre only as good as whats around you”?? Any insights from you all out there is greatly appreciated.