Keep hitting roadblocks

[Jennifer Shearin]

Three years ago I bought my first big rehab project for $81k, and got a 10 yr. construction loan from a local bank to rehab it. My interest rate is at 4.5% and I still have that loan. It's a historic house and I turned it into a multifamily, got the rehabilitation certified by the NPS so I got a bunch of tax credits, and it's been a cash flow cow for the last two years. I put around $170k into the rehab. I estimate the current value to be around $360-380, and I owe $182k. I don't want to sell until I've used all my tax credits, and I don't want to do a cash out refi because of my low interest rate. I found a lender that said they would do a HELOC, but they are using an automated system to value the property and they are coming up with a value of $186k, using the old information and previous sales price. This is a small town and there really aren't any good comps in the historic district. So, they won't do my HELOC because they are nearly $200k off on the current value. To get a full appraisal, I would need to do a cash out refi.

How does anyone get a HELOC without a full appraisal when they've added a ton of value to a property ? I really need to tap into this equity. I am in negotiations on a new project and I was really counting on being able to tap into that money. The other problem I have is that my DTI is too high to get another big rehab loan from the same local bank. I do have a 9 to 5 making six figures, and all four of my rental properties are cash flowing, so I'm not sure why I keep hitting all these roadblocks. Any ideas?

[Will Barnard]

Why not offer your bank to do a full appraisal on the property that you pay for? Show the bank and the appraiser your itemized list of improvements with costs to help show the new value. NOw that it is also a multi family, perhaps the income approach will also better the value after analysis by the appraiser.