A few BRRRR questions

[Corey McNabb]

So I have been researching the BRRRR method but I am struggling to understand a few things and it may be just due to only having read about it and not having watched the process, but if anyone can help me understand how you analyze BRRRR deals, and I dont mean using the calculator, more specifically, how do you get all the information required? For the ARV do you look at sold comps? How can you estimate the rehab if you haven't seen the property, or can you not do it without seeing the property?

Also I heard a podcast that talked about buying at 70%... Do they mean 70% of asking price? or ARV?

Sorry I know that is a lot of questions at one time but any help would be appreciated.

Thank you

[Tom S.]

@Corey McNabb  I'll run through my last project as a real example.  Found a bank owned foreclosure, duplex, for $50k.  I took a look and estimated $25k for rehab.  I went to a local bank that's a portfolio lender (they keep the loan in house, meaning they can loan on a non-livable property, at the time it was missing some kitchen and bathroom items).

The bank did an ARV estimate for me and it came back at $110k. So they would lend $77k on it total (70% of $110k). I had to come in with 20% down on the $50k purchase price (10k down). So the purchase loan was $40k and rehab $25k, $65k total so within their $77k limit.

I finished the job and had a place worth $110k and a loan for $65k on it.  This loan automatically converted to a regular mortgage after completion, so no need to refi which is a huge advantage compared to Hard Money.  No points and 5.5% interest rate.  However, I was able to later come back and pull out some of my equity, so got back my $10k and about another $10k more, which I would use for another project!

Hope that helps!

- Tom