All Forum Posts by: William Acker

@William Acker Yes you need a rehab to bump appraised value. That's important given what you described. I call it BRRRR-ish.

I used this strategy when I purchased my first home. You make your money when you buy. You can't pay full market value and expect it to play out. Your market research needs to give an idea for "how much" to spend. Buy something under market, rehab/value add, and then drag the appraised value up. From my experience what a lender thinks a property is worth is generally lower than market value. Market values have dipped nation wide. Run conservative numbers otherwise you'll trap more $$$ into the property, and/or won't cash-flow as rental if that's a long term plan. 

@William Acker, so long as there is enough equity spread on the appraisal after repairs then there's nothing wrong with this strategy. The rent aspect is not necessary for an appraisal for a conventional refinance. I would advise that you have a firm understanding of the rehab process and ARV, especially for basement conversions. Does this add significant value to your market? With uncertain future market conditions, it's even more important to run your numbers religiously. Keep in mind, you're essentially going to have two separate closings with two separate closing costs respectively. One for the home purchase and then another closing for the refinance. Make sure to account for escrow and appraisal fees. What market are you in?