All Forum Posts by: Chris Dee

I hear you, but 7 years ago we were on the way up (even if we didn't think so). Now, the FED is definitely determined to slow us down. So, I hope we will see increase within the next 10 years. In my area its really hard to get multifamily properties and SFH don't cashflow well anymore with the current interest rates. If we don't get any maintenance surprises with this house, the deal should be good.

 Thank you James, yes, there were times I considered walking away and was sad about it, lol. So my gut feeling told me I wanted this property. I just had a hard time getting around the appraisers blow. :( The 2nd appraiser didn't make me feel better because his math was awful and it looked like he had to work really hard to jack up the price. But my thought is: I can cashflow really well now and it will only improve through the years.

 Thank you, Jay, your advice reads like a textbook, well said! I agree with you completely, but it feels like jumping off a cliff when paying above appraisal. 

So, I don't think anything will be appreciating in the next 5 years (my personal view of the economy). However, long term I am very positive on this city and the state in general. We want to hold long term so we feel pretty confident about the purchase. It's easy to find renters here and we can pay PITI with just 2 units rented. So, if we end up renting the 3rd it will be all cashflow. If we end up refinancing that will all be cashflow too. Thank you for your response and encouragement!

 Thank you Daniel. Yeah I would say both appraisals were off.  I can make this property work nicely for what we need. But I'm hating the feeling of paying the seller more than they deserve for the property.

 There are some cash buyers in my area, but they go for the ultra discounted properties only. 

 Yikes, that's what happened in the 2nd appraisal for this house. In order to get into the number that seller wanted the appraiser used the following values: a bedroom = $10k, 1 br apartment = $5k, 2 bedroom apartment (above grade) = $15k, bellow grade 2 br apartment with no kitchen = $25k.  He basically made up numbers based on what he needed. The seller said "Ok, we have our real number, we aren't budging."  Even if I go to fight with the ridiculous report they still have it in their head it's worth $305k.  So, what do I do?

@Chris Seveney 

Thank you, Chris, yes I agree with you. There is a secondary staircase that can be removed in the property to add 1 bedroom to each of 2 units. So, there is that. Personally, I think the true appraisal is somewhere around $290k before addition of those bedrooms. 

Hi Everyone, 

I'm under contract for a multifamily property for $300k.  Bank appraisal came in at $282k.  Appraisal came in low because there are few multifamily comps and they all sell at massive discount because they were never updated and need total overhauls. Seller paid for 2nd appraisal, came in at $305k, but had lots of poor appraisal practices in it and cannot be taken seriously.  I can make the property cashflow nicely and to me the value is there at the current market price. It seems that paying above appraisal is considered poor practice. Does anyone have a story where it worked out for them? My deal details below.

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 Class: B

Thank you for your thoughts!

Thank you Tristan, I feel it has maybe $290 in value, but the seller won't budge from the $300k contract price. The 2nd appraisal they ordered is full of problematic adjustments that aren't even consistent between different comps.  My lender who has decades of experience and has seen thousands of appraisals, said the 2nd one is so so far outside the appraisal standards and ethics and would never be accepted by any bank.  The seller is using that 2nd appraisal to keep their contract price. Are my hands tied?