How to know if a BRRR deal is good?

Question

I have been studying and reading yall’s posts for over a year and have learned a lot about how to analyze a good deal with the traditional buy hold an rent method. I know about the 2% rule, cash ROI and other metrics of determining if a buy and hold house is worth it. However I haven't learned about the BRRR method in detail. I know the basics, and I know how to use the BRRR calculators online but I really just need to know how to analyze if a BRRR is a good deal. Here are some basics on the deal:

Asking Price: $65,000

Offer Price: $50,000

After Rehab: $85,000

Rehab Estimate: $10,000

Rent: $850

Commercial Loan: 20 year, 20% down, 5.25% interest

After Refi Loan: 30 year, 20% down, 3.5% interest

Aaron W. · Answer

@Aaron Coon Determining whether a BRRRR is a good deal is a decision that you need to determine for yourself. A BRRRR is essentially a buy and hold. The difference is you are buying at a certain price in order to add enough value to the property to get most, if not all, of your investment back during refinance. You will need to ensure you have a thorough enough understanding of your market and property to make the right judgements on purchase price, rehab, and ARV.

Benjamin Seibert · Answer

It looks like this would work as a BRRR. It may not be 100% (depending on how much your closing costs would be on each of the loans). I would make sure it cash flows properly too though - in my area if an $85k property would only rent for $850 the taxes would greatly eat into any income (Im in MD though)

How to know if a BRRR deal is good?

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