Great work on this! 

@Michael Doherty what is the actual cash flow after accounting for vacancy, capex, mgmt and utilities?

Great detailed post and description of the whole process! I think some of the smaller, yet still very important details, are often overlooked when talking about the BRRRR process.

Thank you for sharing your experience, it seems like a success to me! I guess the only thing you would change is waiting for the seasoning period to end.

@Michael Doherty

I’d love to hear who would finance on the appraised value without seasoning. I’ve call about 10 lenders and keep getting 7-12 month seasoning.

@Brian Brusich $765 after accounting for 3% for repairs, 3% for Cap ex, 3% for vacancy $100 a month for water, 7% for management. I do all my own management, I estimated high for water, and all the deferred maintenance/cap ex is complete which is why i factored 3% instead of 5%. 

@Brandon Rouer I sent you a dm with the lender who could finance my property w/o seasoning. 

@Brian Brusich my math was wrong in my original post- just realizing this. My income is $2775 a month. My debt service is $1501. So Cash flow before expenses is $1274. Leaving Cash flow after expenses $765. 

Awesome write up and congrats! 

@Michael Doherty I love this. Exactly what I want to be doing. Great, detailed post. Thank you. I read it several times and am going to print it out for inspiration.

When you approached the HML, how much did they require you to have in reserves? I know you needed 10% of the purchase & 10% of the rehab, plus closing. I'm assuming they paid the rehab out on a draw schedule.

Who did you find to GC the rehab? Or did you do that yourself?

@Michael Doherty

Nice! I am currently working in my first one as well, expecting similar numbers. I am also looking for a lender that can cash-out without 6 month seasoning. Could you share the contact of the lenders you spoke with? I am in South Florida and wonder if they could be potential lenders. Thanks.

@Michael Doherty

This is very informative and insightful. I'm still searching for a great deals to do BRRRR project. It been a while we still searching. Have you read the book by David Greene on BRRRR? What has been instrumental in you starting BRRRR investing?

Alex

@Michael Doherty

That's awesome man - congrats! I appreciate the detailed write up.

I'm currently working on BRRRRing a 4-plex and would love to know who you used for your refinance. Holding costs are so expensive with hard money, so no seasoning would help a ton.

@Michael Doherty

Wow, great information and congratulations on your BRRRR!

@Michael Doherty Thank you very much for taking the time to post this. My husband and I are new and trying to educate ourselves as much as we can. I don’t yet understand all this number crunching but this gives me a real world example to research until I do!

@Stephen Predmore my lender didn't say a specific amount. Reserves are going depend greatly on your own personal DTI. In my case, I have been house hacking since 2016- so not having to pay rent or cover a mortgage really helped my DTI.

The draw itself is relatively straight forward. Once you complete the work you request the funds to be drawn. It usually took 3-4 days from the time you request the draw until someone is sent out to verify the work. Once the inspector verifies the work is done at the cost of $200 they release the funds. The funds are wired to your account within 1-2 days. 

Where I found issues is that: my contractor wanted some money upfront so I had to put a lot on my credit card and wait to reimburse myself, so I would recommend having working capital. I would also time the work/draw so that once my contractor was 80-90% done I would request it. Reason being is because, again it takes 3-4 days once you request the funds for someone to actually inspect it. So instead of waiting for the work to be 100% complete.... and then requesting money... I timed it so there was only a day or so in between. 

Lastly, because it costs $200 (with my lender) every time you request a draw, I clumped a lot of line items together. For example- instead of requesting a draw for 10 new windows for $2,000. I waited for 10 windows, a new furnace and new flooring to be done: for a draw of $15,000 vs $2,000. I only did 3 draws throughout the rehab.

I had a GC and his team do the rehab- I did minor things (exterior yard work) in my free time. 

@Alex Bello I sent you a DM
@Alex Jones I have not read that book yet (although I heard it's awesome). I listened to A LOT of podcasts, read posts like this and asked a lot of questions. I'm more of a visual learner so by writing out the numbers on a piece of paper helped it CLICK.... 

I would start running your BRRRR numbers as if you were to do a flip. Start with the ARV x .7= X (x-rehab costs=max offer).

So in my case I knew the house was worth 220k and it needed 30k of rehab. So $220,000 x .7= $154,000. 154k-30k= 124k (max offer). 

You could use 75% instead of 70% but I'm glad I did 70% because the ARV was slightly off. There's a difference between what something could SELL for... vs what an appraiser will value the property at.

@Thomas Capstick I sent you a DM

@Alex Lade thank you!

@Kristie Smith feel free to ask any specific questions that are tripping you up, glad to help! 

Fantastic level of detail and very helpful for a newbie just starting to get my head around BRRRR!

The biggest win here is you actually did something! Even if you walked away with a lot left in the deal the experience of the whole thing is going to set you up for life! Congrats, Michael!

@Michael Doherty Under budget on your first deal?!!! Now, that is a WIN! Clearly, you were adequately informed.

Congratulations 🎉🎉🎉

@Michael Doherty thanks for sharing ... I’m in the research phase right now!

@Michael Doherty thank you for sharing great break done. I’m in the middle of the same problem refi lender just pulled the same thing with us regarding the appraisal can you share the lender info that you ended up using. Thank you

@Andrew Baker thank you- couldn't agree more! 

@Ola Dantis thank you!

@Shaune Faust sent you a DM

@Michael Doherty Congratulations. Very well explained. Am also thinking of doing buy and hold investment. This was a good insight to it. I want to brrrr with a duplex.