Paid $2,500 up front plus $3,250 of appraisals on a five-property blanket refi that died on a 1.14 DSCR
Five single family rentals, all owned free and clear except two small notes, combined value I had at about $1.09 million. I wanted one blanket loan to consolidate and pull out roughly $520,000. Took me four months to decide to do it, which will be relevant.
Broker was recommended, presented well, knew the blanket product. He charged a $2,500 due diligence retainer, described as credited against the origination at close, plus one point at close. I asked whether the retainer was refundable if the loan did not close and he said in eight years it had never come up. I did not push. That's on me.
We ordered five appraisals at $650 each. $3,250, my money, paid direct to the appraisal management company. Two weeks later the lender's sizing came back and the portfolio debt service coverage ratio landed at 1.14 against their 1.20 minimum. The reason was mundane. Two of the five had been reassessed the prior fall and the tax lines the lender used were 40 percent above what I had put in my own spreadsheet, because I had used the prior year bills. That's about $4,900 a year of additional expense across the portfolio, and at that loan size it moved the ratio by roughly six hundredths.
Options were to take $438,000 instead of $520,000, or to drop the two weakest properties out and do a three property loan. Neither one was worth doing at that fee load, so I killed it. The retainer did not come back. Total cost $5,750 and eleven weeks.
The thing that annoys me most is that this was findable in advance. The reassessment notices were in my own file cabinet. The broker never asked for current tax bills, he asked for a rent roll and a schedule of real estate.
What I would do differently. Get the lender's actual sizing formula in writing before ordering a single appraisal, including which tax figure they use and what vacancy and management percentages they impose whether or not I self-manage. Run my own numbers against that formula with current tax bills. And treat any nonrefundable retainer as a real cost of finding out, or negotiate it to be refundable if the lender's own sizing kills the file.