Cash-Out Refi Options???

[Andrew Davis]

We recently bought our first Duplex for $90k about 8 months ago in Columbia, SC. We purchased through an older woman who was renting it out for about 30% less than market value on month-to-month leases. Since we bought the place, we have raised rents and have tenants who have signed 1+ yr leases for $1500/ month in total rents. We financed it with 25% down on a 30 yr fixed. The CAP rate at our purchase price is 11% and the CoC return is 20+%. Great numbers and we are super pleased so far! However, we feel like at this point the property is worth more than the $90k we paid for it. In addition to raising rents to market value and getting long term leases signed, we've put about $5k into the property (floors, paints, etc). We were just attempting to cash-out refi it at $120k loan value and the appraisal came in at $95k, making it useless to cash-out refi via this method. My question...Is there any other way we can take cash out of this property? Is there any way to get the property to appraise at a contrived value proportionate to how much income its generating? At an 8 CAP the property would be worth about $130k based on the income its generating, and that # takes into consideration property management, taxes, insurance, MX, and CAP-EX. As a self-managed property the contrived value at an 8 CAP would be $140k! We really want to keep this property, but if we cant get any cash out of it, we may just list it for sale as a "cash-only" deal and see if we can get a buyer at an 8%CAP. Our goal is to buy another place without having to pull again from our personal savings to do so. Any suggestions are greatly welcomed! Thanks in advance!! Andy

[Mike McCarthy]

@Andrew Davis for small multi families (and SFH), increasing rent doesn't really matter much. CAP rates are more important when you get into commercial loans.

You put $5K into the house, so I would expect about a $5K increase in value - often less. Things like painting typically don’t add much appraisal value. You’d need to increase value to the house, add a bedroom, bathroom, significantly upgrade the kitchen/bath, etc.

good luck!