Updated almost 2 years ago on . Most recent reply
Help Look Over My Quick Underwriting
Hey guys my name's Mike,
I think it's my first time posting and have been doing a ton of reading and research, want to finally make the leap into real estate investing. Chatted with a local realtor I've used in the past that also has investments. Currently have no doors and want to practice some underwriting. A property came up that's in a good area, my back yard (Rochester NY), seemed cheap compared to the neighborhood, and wanted some practice. Threw this together in a windows notepad this morning quick, all figures are assumed and have not contacted anyone yet for specifics. I'd appreciate any feedback you've got to give as I can only learn!
Property: Here
Comp: Here (Sold on 8/1/2022 same street)
84 Grangerford Hts, West Henrietta, NY 14586
Listed : 100k
HML at 80% of ARV (240k) = 192k
Interest only payments (10% interest)(192k x .10) /12 = $1,600/month
Points = 2 (192k x .02) = $3,840
Loan origination fee's = $1,000
Additional monthly holding costs:
- Taxes (5k/12) = $416
- Insurance = $60
- RGE = $120
Total monthly = $596
Duration of rehab = 6 months
Interest only ($1,600 x 6) = $9,600
Points = $3,840
Origination = $1,000
Holding costs ($596 x 6) = $3,576
Total Holding costs = $18,016
Loan amount of 192k:
Subtract:
- Purchase price = 100k
- Closing costs (4%) = $4,000
- Rehab = $50,000
Totaling = $154,000
Remaining balance on loan= $38,000
Sale at $240,000:
(-) (Realtor fee's (6%), closing costs (4%)) = $24,000
(+) $38,000 Remaining from HML
(-) Holding costs ($192,000 + $18,016) = $210,016
Profit ($240,000 + $24,000 + $38,000 - $210,016) = $43,984 - (capital gains at 22% completely estimated) = $34,308
Buy and hold:
Appraised at $240,000. LTV at 80% = $192,000 - closing costs ($4,000) = $188,000
Profit = (re-fi $188,000 + HML remaining $38,000 - holding $18,016 - HML $192,000) = $15,984
Biggerpockets rent estimator is around $1,800 - $2,000 so should meet the 1% rule. Some context behind the initial choice for the HML is I don't have the liquid funds to support the purchase and rehab costs. I do have funds saved for investment purposes and equity for a HELOC in my primary. Let me know what you'd do different, what I didn't account for, what you'd change, Thanks!!