Appraisal Issues with Refi

[Gregory Doyle]

I am house hacking a duplex that I purchased last year significantly below market due to it being poorly managed, and have since made some minor improvements that allows me to raise the rent to market value.

I recently attempted to do a cash-out refi expecting to benefit from the much-improved income, but the appraisal did not go as expected.

Because the building is 2 units and technically residential, the appraisal came back at $520k using the market value evaluation. The income approach model valued the the property at $700k, but my lender was not able to use the value based on the income approach because of the property type.

I may be grasping at straws, but is there a way to refinance/pull cash out of a duplex based on it’s income value instead of the market value?