It's not a terrible decision, but I would have let them go and put someone in at market rate. $100 a month is $1,200 a year or almost one month of rent.

This would be a terrible market for you. 

Bureaucrats are terrible at assessing true value.A big challenge with duplexes are getting comps, both on the purchase and sale side. 

They do things like use comps that are in terrible shape to comp to a house that was recently beautifully rehabbed or use comps from deep in the ghetto to comp a house that is in a hip trendy good area or in one case I had the appraiser use a comp from Independence MO for a house that was in South Hyde park....10 miles away and in a completely different city!!!

I just paid $6850 to do this in a row home in Baltimore County but we moved things a bit so there was some additional ductwork involved.Also, unless the plaster walls are in terrible shape I wouldn't do anything to "modernize" them.

So this deal is terrible but I am practicing to get better at running my numbers on properties so any advice anybody has is greatly appreciated!

Terrible idea, but it happens. 

@Cynthia R. this seems like a terrible suggestion. 

Where I'm at in California I can install the solar now on the primary house before NEM 3.0 goes into effect (basically a terrible agreement between solar owners and their utilities) I'm looking at a 10kW - 11kW system to handle both buildings. 

If a bank is terrible and they can use our appraisal but another lender is great, but cannot use the appraisal, then the choice should be put on working with the better lender.Now, how to we reduce our risk with lenders?