Cash-Out Refi Advice for First Timer

[Matt Z.]

Hi All,

I'm reaching out for tips as this is my first time considering cash-out refi. 

Exactly 1 year ago today, I purchased a duplex for $~348k in a fairly high rent area with a top-quality tenant pool. Put down 15% on a conventional loan, couldn't do more because I needed cash for renovations. 4.25% interest w/ ~$50/mo PMI,.

House appraised at $375k at time of purchase. Based on the renovations, and increasing values in the neighborhood (based on recent sales), it should appraise at a bare minimum of $450k.  

I'd like to make sure the appraisal isn't a disappointment, which would thus affect the amount of cash I can pull out and still maintain 20% equity. 

This is an urban neighborhood of very old (100-200 y.o.) homes, many with historical and landmark designations.  My house has a few important & unique advantages that boost rent value & reduce likelihood of vacancy - amazing layout that rivals many new-construction apartments, huge back deck and fenced-in landscaped yard, driveway that can fit 2 cars, high-end boilers that keep energy bills low, massive combined 2nd+3rd fl unit with 3bed/2ba, high-end fixtures, beautiful common spaces, ample secure storage, blah blah blah. 

However, having an appraisal during the winter months poses a few disadvantages: Some remaining paintwork including rear deck refinishing needed outside that can't be done until spring, landscaped yard isn't at its best in the winter (though I have pictures of it), I still have some work I want to do to the foundation/basement, etc. 

Do I prepare some sort of research package to present to the appraiser, with my own comps and such?  Or would this insult the appraiser?

Also, do I hire an appraiser myself then approach lenders for a cash-out refi?  Or do a approach the lender first?

Goal of Cash-Out Refi:

- Have cash on hand for another possible purchase

- Get rid of PMI on this property

- Maintain 20+% equity on this property to avoid PMI and have a nice cash flow.

Thanks,

Matt

[Stephanie P.]

@Matt Z.

You have to be careful to not create an over-improvement for the area.  If you say that there "aren't any truly comparable" properties in the area, then you may have dumped a good amount of money into a nice property, but not one that will appreciate like you want it to.

Gather the permits, but don't worry about the receipts; you're too far away from the purchase date for them to factor into the value as long as the work was done in a "workmanlike manner."

Don't get your own appraisal unless it's for your own use. Every lender I know makes the borrowers go through their AMC (appraisal management company). What are you basing your "450K minimum" valuation on? Is it sales with condition adjustments?

Please accept my colleague request.

Thanks

Stephanie