Purposefully Holding Down ARV for Buy and Hold Rental?

[Mikael Winkler]

Hello all,

I have a scenario I've been kicking around regarding ARVs on rental properties. 

An investor is able to get a property at a significant discount, and it really only needs cosmetic repairs (flooring, paint, new fixtures, etc) to almost double ARV. Are there any lenders that would cap ARV around what the investor wanted to allow the numbers to still work? I imagine the only ones who'd do it were portfolio lenders, or any that service their own loans.

Example:

Purchase: $80,000

Repairs: $25,000

ARV: $150,000-$160,000

Area rents: $1100

Basically, having about a $120,000 mortgage after a refinance, and adding monthly maintenance/holding costs etc, kills the cashflow. Is there a scenario where a lender servicing their own loans would, for example, agree to give a lower ARV than $160,000 to allow more cashflow?

Please let me know if I'm thinking about it incorrectly. I probably am!

Thanks!