Cash out REFI with unknown appraisal !?!?

[Robert Sapienza]

What's up everyone. 

Before I start let me preface this by saying that I HAVE talked to my local lender, as well as a few local appraisers in the area and no one could give me a CLEAR answer on this question you are about to read.

So my business plan thus far has been to purchase multi fams with cash or a line of credit that I have. After that I refi out, and pay myself back, or pay off the line of credit that I used. I have done this mostly with houses that were in need of serious renovation so I never had any issue getting 100% of my capital back. 

I am now starting to look at larger multi family properties (5 units and above) and I would like to use the same method. Problem is that I am starting to find some private deals that CASH FLOW great even at full ask, yet the unknown appraisal is putting a question mark in if I am unable to get my capital back... and that is a VERY big deal for me and my business plan. Any one out there who maybe syndicates deals or uses a similar method that I use, how do you go into a deal (no matter how good it cash flows) without out knowing its true appraisal considering an appraisal is just an individual persons opinion. 

Here is an example:

Please pass no judgement on this deal as it is an example, keeping numbers simple and easy to calculate.

Full ask 165,000 

Purchase 165,000 Cash

NOI of 22,000 per year

Comps in the area are all over the place because of the nature of the city.

I would need to get a loan for 165,000 to get my capital back which would mean I need appraisal to come back at 220,000 (75% LTV). Although the deal makes perfect sense to me as far as cash flow goes, and one could justify that house could easily comp at 220,000 because of the gross income factor along with the NOI, how can I be confident I will be able to re-coup all of my money considering I bought it at 165,000. ESPECIALLY if this deal was being syndicated and i NEEDED to re-coup all of my money. How does one really measure an appraisal. Times the deal by 10x and make it 1.65 million and this situation is even crazier. How does one judge their offer BEFORE an appraisal was made. 

Any insight is greatly appreciated!