Would you do this deal if you were me?

[Chris Dee]

Hi Everyone,

In advance, thank you for any insight. I'm currently under contract for a multi-unit that didn't appraise. I'm in analysis paralysis, need peer input! Would you do this deal if you were me???

Location: Midwest, mid-size town with a number big and small companies, hospital, heavy summer tourism. I'm extremely familiar with this area.

Property: 3 unit, all 2 bed/1bath (1 of the 3 units is not allowed as rental due to zoning. It is half below grade and very well finished with 3 egress windows. )

Cost: $300k (contract) (Appraisal by the bank:$282K)

Rent: Long-term rental: If I only rent 2 legal units min rent is $3200, if I rent all 3 units min rent is, $4K. Midterm rental possible because of traveling professionals and hospital. Short-term not allowed by city.

Condition: Built in 1930, All units are updated, newer roof, new windows, new foundations, new sewer, new electric/plumbing. I should expect minimal maintenance. 

Renter: B

Because of the appraisal, my lender, seller agent, 2 appraisers are now in a heated email discussion. Seller paid for 2nd independent appraisal, where appraiser massaged valuation into $305K. Bank found lots of issues with that appraisal and won't accept it.  Property didn't appraise because all multi-units comps sold in the area are in terrible condition in need of min $100k update to get them into this century. This property is updated.  I'm in opinion overload. Someone talk some sense into me. Good or bad? 

Thank you,

Chris

[Ko Kashiwagi]

Hi Chris,

Why did 2 appraisals take place in the first place? Sometimes appraisals are transferrable, but if your lender can't accept it, either you have to follow the guideline or go with a different lender that can use it. It's probably a good idea for you to also look into the valuation yourself and figure out what you think it's worth. Paying 300k for a property worth 282k would not be a great idea.