All Forum Posts by: Devin Peterson

 Hey BP family,

I’m hoping to get some advice because I’ve hit a bit of a roadblock with a refinance, and I’m not sure what my next steps should be.

A couple of months ago, I purchased a property using a hard money loan for $115,000. Before the purchase, I got an appraisal that valued the property at $130,000 as-is. Fast forward two months, and now the property is rented out, so I decided it was time to refinance.

I went with Kiavi for the refinance, paid $1,000 for their appraisal, and was shocked when it came back at $115,000 the exact price I paid for the property. No improvements have been made, but nothing has deteriorated either. The new appraisal just doesn’t make sense, especially when compared to the first one.

Now, Kiavi is telling me I need to bring $20,000 to the closing table** to make this work because they're lending at 70% LTV. I wasn't expecting this at all, and I'm trying to figure out what to do.

Here’s what I’m thinking:
1. Dig into the Appraisals: Go over both appraisals with a fine-tooth comb, look at the comps they used, and challenge the discrepancy if needed.
2. Switch Lenders: I’m currently working on refinancing (six other properties), so I’m thinking maybe I should take everything to another lender who might be a better fit.
 My Questions:
- Has anyone dealt with this kind of appraisal discrepancy during a refinance? How did you handle it?
- Are there other lenders you’d recommend for refinancing rental properties that might have a smoother process or better terms?
- Do you think it’s worth challenging the appraisal with Kiavi, or should I just cut my losses and move on?

I’m trying to keep things moving, but this $20K requirement is throwing a wrench in my plans. I’d love to hear your thoughts, advice, or any experiences you’ve had with similar situations.

Thanks in advance for your help!

I closed on my first deal back on 10/16/24 so I'm a newbie. This deal was found on MLS and is a new construction 4/3.5 SFH with DADU and I purchased on n FHA owner-occupied loan. I only brought 3.5% down to closing and the seller paid 3% CCA which I used to buy down my rate to 4.8%. I'm house hacking living in the DADU and renting the 4 bedrooms out by the room. I had no trouble filling my rooms and the house appreciated for $10K over purchase price, the tenants are paying utilities. I'm cash flowing $1100/month. So even though I'm new I've seen enough to know I want to scale this new construction/build to rent by the room strategy in my market. I'm not renting to students! My property is in a depressed area walking distance to the largest employer in the area which is a shipyard. The area is loaded with men on 1-2 year contracts who have homes some where else and they just need 1-2 years of safe, clean, comfortable housing and the only other option is seedy hotels.

That being said, I approached a local DSCR lender who refuses to look at my specific rental strategy in underwriting. The lender actually said he will only underwrite my property as a single renter long term rental based on comps. So I did that and my property revenue cannot service the debt but using my strategy I'm cash flowing $1100/month after PITI on a new construction home under warranty. The lender seems to believe that the only rent by the room strategy that exists is renting rooms to college students and his quote to me was "more people, more leases, more problems".

What do I know?? But my 4 renters are in there 30's-50's and work 50+ hours / week building naval ships and submarines and they enjoy being close enough to walk to the shipyard and coming home to a brand new house with all the modern upgrades. My house has no vacancies and other guys are constantly calling and inquiring about rooms available. I'm not really "pitching an idea" as much as I'm wanting to scale up something that is untapped and ready to roll. My builder has 4 houses in the area already built and on MLS but I can't deploy another owner occupied mortgage for another 11 months.

A DSCR would be perfect for me because I have funds for down payment, I have good enough credit and my strategy has proven to do a lot more than just service the debt.

Does anyone know of any good DSCR lenders that I could contact?

Thanks,   Brian