Trying to refi out of fha

[Neil He]

Hey all,

First, BP is a great resource and I appreciate everyone who contributes. Thank you so much. I hope this Q will clarify for someone in the future.

We bought a triplex for 532k with 3.5% down FHA in September ‘18 just outside of Sacramento Ca. A fixer for sure, the house was in cosmetic disrepair. We put in new floors, paint, fixtures, and cleaned up landscaping. The house is pretty reasonable now and we were able to up rents from $3100 to $5400/mo.

I started talking to some lenders to refi Because i think i have an 80% ltv on lock to ditch PMI. I learned that they want 75% to cover a freddie/fannie loan. I think that will take some convincing on the appraisal to reach 75%.

From searching, it looks like the appraisal weighs heavy on comps and money put into the property, less on the rent multiplier and cap rate comps? I figured that ill have to assemble a report to try and show the appraiser how the valuation can pass. I have 3 really good comps that will support a 75% ltv (if they pick any junk to comp it’ll kill the deal). On money we put in, we absolutely cleaned out lowes and HD on clearance. We found quality stuff for 50-80% off along the way including a pallet of flooring for a dollar a box. On landscaping we used existing plants and made something out of nothing. Other materials i got at wholesale because i own a business.

Any suggestions from people that have been through the process?

How can i value the work and discounted materials and our free labor?