Investor guide
How Appraisals Work on Investor Loans
By REI Capital Consulting LLC · Updated
Short answer: On investor loans, the lender orders an appraisal that can include an as-is value, an after-repair or as-completed value, and for rentals, a market rent estimate. These figures feed directly into LTV, ARV, and DSCR limits, so the appraisal often determines the final loan amount. Borrowers usually pay for it and should expect it to be conservative.
What gets valued
- As-is value: what the property is worth today, before work
- After-repair value (ARV) or as-completed value: what it should be worth when your scope of work or build is finished, based on your plans and budget
- Market rent: for DSCR loans, often provided on a rent schedule form
How it changes the loan
If the ARV comes in below your estimate, any ARV-based limit shrinks and your cash needed grows. If market rent comes in low, the DSCR drops. See LTC, LTV, and ARV explained for a worked example.
How to prepare
- Give the appraiser your scope of work, budget, and plans
- Share three to six recent comparable sales you relied on
- Make sure the property is accessible on the scheduled date
Timing
Appraisal turn times vary by market and season. Build them into your closing timeline, especially on contracts with short closing windows.
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This guide is general education, not legal, tax, or financial advice, and not an offer to lend. Lender requirements vary and change.