Chicago Lender recommendations cash out/refi

[Kyle D Birch]

Last July, my fiancé, now wife bought a 2 flat that was advertised as a SFH and the zoning certificate says SFH, but it was built as a two flat. 4 entrances, 2 baths, 2 kitchens, 2 furnaces two 1960's mailbox slots in the brick etc. There's are also two 2 flats next door that are "legal" that are identical to ours. The person who owned it prior to us had been there 30+ years and knocked out a doorway between the two units and lived in the whole property.

We rehabbed the property and rented out both units. We currently owe about $153k and all of the comps in the neighborhood are $250k or more. 

We are looking to do a cash out refi, but I think we would have an issue when getting it appraised because the appraiser would see the property as a 2 flat but it's zoned as a SFH. I have spoke to a few lawyers about getting the certificate changed, but had no luck.

Does anyone have an recommendations for a lender who they would suggest given the situation. I am also open to other ideas if you have them. I have emailed the historical water department with a foia request to try to get a bill that could read the property as a 2 unit but haven’t had any luck.

Thank you in advance for your time.

[John Warren]

@Kyle D Birch all lenders using conventional financing are going to run into the same issues with the appraiser. Can you get your value based on it being a single family with an in law unit? Maybe focus on the price per square foot and not so much on the zoning?

This is always the issue with illegal units though. They provide extra income, but they still aren't legitimate for lending purposes so you never get your money back through the sale or refinance. You just have to look at them as an extra income stream that will not aid your balance sheet much.