A $104,000 CASH IN refinance and how to avoid doing one!

​Today I did my first CASH IN refinance!  Yes I said CASH IN not CASH OUT.  Meaning I had to bring $104,000 to close the deal.  Why?

1.)  I overshot my after rehab value on the properties I was refinancing.  I used an income capitalization approach to forming my ARV instead of a sales comp approach (what I should have used.)

What did I learn from this painful mistake?

1.)  Stick to buying larger commercial properties which fall under commercial appraisal standards.  Commercial real estate is considered any thing with a commercial use or 5 units + multifamily residential.  This ensures that every dollar of net operating income that I drive is accretive to the property value.
2.)  Appraisals (residential and commercial) are always more conservative on refinances.  On a purchase, when you have a contract price, it carries a lot of weight with an appraiser who is working on your deal.