Mortgage Refinance Question

[Chaits J.]

Hello All,

I did my first BRRR and below is my situation.

Purchase Price: 200K

Rehabs : 50K

My mistake is that I bought a duplex that is zoned as single family home in township records.

Now when I am trying to refinance it, appraisal is coming at $230K as appraiser is not considering the 1 bed , bath and extra square footage that is part of the mother in law suite. We were expecting a refinance appraisal of atleast $325K as similar sized homes are at $350K in the area.

My question here is, If I go with private lender for refinance Will they appraise the same as conventional lender or go by the rents and sq footage of the built area?

Rents: $2800 in total.

Thanks all!

[Steve Kuptz]

Hi Chanakya

Any lender - private, hard money or conventional will look to their ultimate exit strategy as they underwrite your loan request.   Most Private/Hard Money Lenders will take the total rent into account when underwriting. Unfortunately they will also cost much more than a conventional lender which will negatively affect your bottom line.

If you do end up going with a hard money or private lender make sure you have enough time on the liss aaan to further season the property to get the $250,000 you need

All that being said, you are not that far off at $230,000. With today’s low interest rates I would continue to work on a way to finance conventionally.  Perhaps a 2nd TD if your conventional lender will allow

Good luck!!