STR appraisal and cash out refinance
We bought a distressed 6 unit property in the Downtown Mixed Use zone, knowing we could convert the apartments into nightly rentals. With 5 of the units completely renovated we are bringing in $11,200/mo in short term furnished and nightly rents. We purchased the property for $340,000 after mailing the owner a letter with interest. We then have renovated it ourselves, minus electrical and plumbing, over the past 8 months. We have put a total of $120,000 into renovation cost, not including any of our labor. We just got a commercial appraisal, which is a new world to us, and it came back at $500,000. He stated we cannot count any of our short term rents or furnishings towards the value. My question is 1) How can the income we are making not be considered at all in the valuation? 2) Did our lender order the wrong type of appraisal? Is there a specific appraisal that can be used specifically for STR? 3) Does he have to find comparable sales that are also used for STR or can he compare apples to oranges and use long term rentals for comparable sales?
Thanks!