"Appraisers can be unpredictable, and if the valuation comes in lower than anticipated, you might have to bring extra cash to closing or renegotiate terms."
Definitely felt this one... had an appraisal come back lower on a duplex last year and had to scramble to cover the gap. Glad you mentioned rental trends too—people sometimes overlook how quickly markets shift. Having that extra cushion isn't just smart, it's peace of mind. Solid advice all around.
I've been through the appraisal rollercoaster a few times myself, and while having extra cash on hand is definitely smart, sometimes renegotiating terms can actually work out better. Had a property appraisal come back low once, and instead of scrambling for more cash, we pushed back a bit. Seller ended up meeting us halfway, which saved us some serious stress. Cushion's great, but don't underestimate the power of negotiation—especially if you've got solid comps to back you up.
Totally agree with you on negotiation being underrated. Had a similar experience myself:
- Appraisal came back lower than expected on a duplex I was eyeing.
- Initially panicked and started crunching numbers to see if I could swing the extra cash.
- Decided instead to calmly present comps and explain my reasoning to the seller.
- Seller wasn't thrilled at first, but after some back-and-forth, we found common ground.
- Ended up splitting the difference, which saved me from dipping too deep into my reserves.
Having that cushion is definitely reassuring, but sometimes just clearly laying out your case can make a huge difference. Sellers usually want the deal to close as much as you do, so it's worth a shot to push back gently. Glad it worked out for you too.
Negotiation definitely helps, especially when appraisals throw a wrench in things. Curious though, did anyone here find lenders flexible on DSCR requirements after negotiating a lower price, or was it still a headache?
I've seen lenders budge a bit on DSCR, but honestly, it's usually more of a headache than you'd hope. A couple things I've noticed from my own experience and talking with others:
- Even if you negotiate a lower price, lenders typically stick pretty close to their original DSCR guidelines. They might be willing to give you a bit of wiggle room (say, going from 1.25 to around 1.20), but anything substantial is rare.
- The flexibility often depends heavily on your relationship with the lender and your overall financial profile. If you've got a solid track record, good credit, and a history of successful deals, they're more likely to bend slightly.
- Sometimes lenders will consider other compensating factors—like additional collateral or reserves. For example, I had a buddy who was able to get a slightly lower DSCR approved because he agreed to keep six months of reserves in escrow. Not ideal for everyone, but it worked for him.
- Smaller community banks or local lenders tend to be a bit more flexible than the big national players. They often have more discretion in their underwriting process and can look at your situation more holistically.
One thing I'd be curious about though—has anyone successfully used alternative income streams or additional collateral to help meet DSCR requirements? I've heard mixed stories on this, with some lenders being open-minded and others shutting it down immediately...
