Terrified about the end result

[Eric Schrader]

So I have been thinking about getting into real estate for a while. I have been listening to the pod casts, watching the webinars, doing some analysis, trying to convince my wife, and investigating my local market for flips and buy&hold. One of the reoccurring threads on BP is to be conservative with the rehab cost and the ARV. Those 2 things, when wrong, tend to get you into trouble. Which brings me to my point.

For the ARV you get local comps and local realtors feed back, etc. I recently tried to refi my own home and got an appraisal. Not high enough to eliminate PMI (80% LTV) so we didn't refinance. The appraisal did indicate that we had about 40k worth of equity, so I thought "Why not a HELOC?" Use that to start investing. Got a lender, sent the 1st appraisal to them and, of course, they want their own. They do a drive by. Estimate is 40k less than the first, appraisal documents are full of errors. 2nd appraiser shows up, does his thing and the on site appraisal is less than the drive by! I have not received this appraiser's documentation yet.

How do you contingency plan for over a 10% difference in appraised value?