an someone help

6 Replies

Im looking to do a BRRRR strategy on this property

Price: 390,000

ARV: 660,000

repairs: (my dads a contrator) 40,000

that totals up to : $430,000

I got a hard money lender to agree to give me 429,000

the problem is although he is a friend he wants 15% and 5 pts 

Can someone calculate that for me to see how much im gaininig or losing I dont understand the numbers

the 15% is the annual interest-only payments on the loan amount.  So 15% on 429K is $64,350.  Divide that by 12 (months in a year) and your monthly loan payments are $5,362.50.  Now you need to determine how long it will take until you Refi to see how long you will need to make those high-interest payments.  The 5 points are 1% of loan amount per point, so another 5% on top of that is $21,450.  If it took you a whole year from purchase to Refi, you would essentially pay 64,350 + 21,450 = 85,800 in interest (yikes!).  If it only took you 6 months, your total interest payment on the loan would be cut to 53,625.

thats only part of the equation to determine if you are "gaining" or "losing".  Timeline, income generated from rent, closing costs, etc. all contribute to the bottom line.

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@Nick Campanella at the top of this page go to Tools > House Flipping Calculator and put all the numbers in there. You'll see the costs and returns, etc. 

If you don't understand how to analyze a deal and run the numbers, I highly recommend you take the time to learn before you jump into a deal.

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