DSCR loan low rental appraisal?

[John Asher]

I just got an appraisal back for a property I am trying to cash out refi.  I bought it for $100k and the appraisal came back at it being worth $210k but only worth $1000 a month in rent (the rental comps are nowhere near as nice as the house in my opinion and one of them is really a house converted to an office). My application says the home should rent for $1500 and is worth $195k. Personally I wouldn’t rent it for less. I imagine this will be an issue? 

[Katie Smith]

Hi John! Are you working with a broker or direct lender? This is when working with a broker comes in handy - as they can get creative with other lending channels. Some lenders will only use the monthly rental income on the 1007, and others will allow a variance if you have a current lease. I recently had a similar situation occur with one of my clients. They had a lease in place for $2,350, and the 1007 came in at $1,995. The channel we originally were going with only takes the 1007 number - we tried to dispute the appraisal with supporting comps and the fact that the appraiser completely missed a bathroom but they wouldn't increase the 1007 amount. We then moved the borrower to another channel that allows a variance AND an appraisal transfer, so they did not have to pay for another appraisal. I would try an explore another option.