In this episode, Quentin talks with a member who is going through his first BRRR property. He is looking for advice on the refinancing part of the strategy. He doesn't have comparables in his area, but we cover some tips to help him maximize his appraisal.
The member shares that he is currently working on his first BRRR project in the Port Coburne area of Niagara region. His first investing endeavor is transforming a single-family home into a legal duplex. In addition, he has a condo in Calgary. Currently, he is trying to gauge what his next steps should be, while looking to prepare for refinancing his property.
The member shares that his Calgary property has depreciated in value. Quentin adds that while the value of the real estate does not always go up, it is important that the property has a positive cash flow. On the subject of property appraisals, Quentin recommends going through a course on the appraisal procedure, available in vault section. As for the preparation steps, Quentin says that the first one is to locate any comparables in the region and create an appraisal package for the appraiser. There are also samples on the website that have helped other members receive higher appraisals.
He adds “The key is always to, if you're expecting the appraisal to come in, let's say at $500,000. To prepare your package so that your appraisal looks like $550,000, and if you end up getting $525,000, then you know, it's a win win-win.” Quentin further adds that if the member does not get the desired appraisal, they have the option to either go for a second appraisal or take a shorter-term mortgage.
He prefers variable rate mortgage as with a variable rate, you can always refinance a variable rate with three months interest penalty.
On the subject of lack of comparables in the area, Quintin suggests picking a square footage of a house that's very similar to the square footage of his property.
Another option is to look for comparables a little further down the road. Out of the three property appraisal methods—comparison, income, and replacement—according
to Quentin, the ideal is the income method. In conclusion, he reiterates that the member must be present when the appraiser arrives. He needs to show a professional attitude and seriousness, as an appraisal is when you get paid.
His Background and Experience in Real Estate Investing [00:50]
Importance of Having Cash Flow on Assets [02:50]
How To Prepare for Property Appraisal [03:54]
Strategies to Get Desired Appraisal Value [05:25]
What If There Are No Comparable in The Area? [08:19]