Found a BRRRR. Help needed.

[Calvin H Duggin]

Hello all ill try to make this short and too the point.

single family home 2br 1ba no room for change in floor plan and small house in good area 

All numbers below are conservative. 

Offer price 70k

Rehab cost 30k

ARV 150k

Monthly Rental income 800.

Cap ex 2000/yr 

Insurance 850/yr 

Maintenance 400/yr

Property tax 400/yr 

closing cost 2000

vacancy rate 5 percent 

management fee 10 percent

My wife and i are currently house hacking. Converted SFH into a duplex. We have been looking to expand our portfolio and put a 5 percent down on the property listed above with conventional loan and live there. After repairs (1yr) leave and rent the house then refi. I put these numbers in the bigger pockets BRRRR calc and am a little confrazled. Yes that is a word.

If im reading this calculator right it may be best to walk away offer lower price or use this for a fix and flip. 

Any thoughts would be appreciated,  

[Todd Rasmussen]

Purchase price is too high or rental rate is too low for you to be happy with the Brrrr strategy comparing your numbers to our experiences in TN. Fix and flip or try further out from Nashville.

[Calvin H Duggin]

@Todd Rasmussen thanks for the input. I think that a flip is the only answer. I'm not looking for a flip but it may help get me rolling.

I take it you invest in the Nashville area?

[Todd Rasmussen]

@Calvin H Duggin Heck no, I can't afford Nashville, lol. We focus on Clarksville/Oak Grove Area but we are out that way.

[Calvin H Duggin]

@Todd Rasmussen here I thought I was the only one finding stuff in Nashville area. The market here is crazy right now. How long have y'all been investing? Out of state working out alright?

[CJ M.]

@Calvin H Duggin

I'd pass. If it appraised at $150K and you assumed a 30 yr mortgage at 5% APR, 70% LTV, and capex, vacancy, repairs, PM of 25% of gross rent (I made this % up for a quick analysis), you'd be at nearly a -$70/mo. loss.

Monthly rent seems too low on a property valued that high. But, I'm basing that only off my area. For example, I see $795+ for 2/1's in C to C- neighborhoods in the midwest (that are appraised 1/2 that). Maybe try and negotiate the price down....substantially.

[Rivy S.]

Doesn't work as a brrr but seems like perfect numbers for a flip

[Todd Rasmussen]

@Calvin H Duggin

Started looking in Dec '16 and closed on our first Feb '17. Been in/around Clarksville with one exception since July '18 and figuring out a CA exit strategy.

[Calvin H Duggin]

@CJ M. The market around here is insane. The 70k offer is an offer they are asking 140k before the rehab.

What about a flip in your opinion?

[Calvin H Duggin]

@Todd Rasmussen CA exit to move local?

[Todd Rasmussen]

@Calvin H Duggin

Yes, currently looking at rossview school district in Clarksville for relocating. Have to time it with replacing enough of our w-2 income with rental income to make the move feasible/not shoot ourselves in the foot from a financing standpoint.

[Eric Yow]

I'd be surprised if a 2/1 in Clarksville truly has an ARV of 150k, but assuming that's correct, flip it! Take the $30k you'd make, give generously to your church, pay your short term capital gains, and put the rest in two or three different properties that CF better than this one. Boom! If there's anything I can do to help along the way, let me know.