They now have a loan amount of 140k. 2 months later the rehab is done and the property now appraises at 220k.

Successfully closed, although not on time due to a rouge appraiser, we navigated the process as smoothly as possible, given the situations.

Would converting half of the garage and leaving a one-car garage maximize appraisal value? 

Here is the dataPurchase price 229,000ARV 365,000Their estimated rehab cost 65,000Our diligence came in at 95-100K as estimated by a GC/Investor who has been flipping for 15 years and is a home inspector as wellIt appraised for ARV of 356,000Their estimate for foundation work was 8,000 &8,500. 

I originally purchased for 142k and it appraised for 156k.

Purchased for 142k appraised for 156k. 7k in renovations.

The one silver lining was that the appraisal came in 21k over what I had anticipated, which helped mitigate our losses.

The one silver lining was that the appraisal came in 21k over what I had anticipated.

There is no large renovations needed to this property which would drastically increase its appraisal value. 

So partner would make $3562 (5%) on their $71,250.Cash Out ReFi: 3.5% at 30-years at 70% LTV (assuming no appraisal increase) = $199,500.