BRRRR Calculator Misconception

2 Replies

For all of you BRRRR calculator masters out there, I have a quick question for y'all.

When it comes to "Total Cash Needed at Purchase" I believe this is deceiving. At first I was thinking all i needed for actual cash to do the deal was that amount, but then i looked over everything again, and my question is:

This number is the number needed to just acquire the property correct? Not the amount needed of your own money for the whole project. You would need to add up 

down payment+closing costs+holding costs during rehab+loan points/fees+Interest payments per length of the rehab+any other monthly expenses (city garbage)=Total cash needed to run the deal

I'm trying to figure out what all needs to be included to calculate the total cash i need to bring to the deal in order to get it refinanced and have the tenants start paying the operating expenses. 

Thanks for clarifying for me, I am really trying to get the ball rolling here. 

-Logan Splinter

Just took a peek back at one of my recent reports. Total Cash needed at purchase for me is Down Payment. Rehab Costs. Closing Costs. 

It probably also includes loan points/fees, but I had $0 for that. 

It does not appear to include the operational expenses or PITI.For that, I believe you want to go to the "Rehab" tab on the results. And there is "Total Cash Outlay" which appears to the sum of "Cash Needed at Closing" plus "Holding Costs". Holding costs is based on the amount of time you enter for the "Rehab Time".

Hope this helps.

Originally posted by @Logan Splinter :

For all of you BRRRR calculator masters out there, I have a quick question for y'all.

When it comes to "Total Cash Needed at Purchase" I believe this is deceiving. At first I was thinking all i needed for actual cash to do the deal was that amount, but then i looked over everything again, and my question is:

This number is the number needed to just acquire the property correct? Not the amount needed of your own money for the whole project. You would need to add up 

down payment+closing costs+holding costs during rehab+loan points/fees+Interest payments per length of the rehab+any other monthly expenses (city garbage)=Total cash needed to run the deal

I'm trying to figure out what all needs to be included to calculate the total cash i need to bring to the deal in order to get it refinanced and have the tenants start paying the operating expenses. 

Thanks for clarifying for me, I am really trying to get the ball rolling here. 

-Logan Splinter

@Logan Splinter I was running some BRRRR Analysis' recently and noticed the same thing. I am a newbie and not familiar with the process yet so still learning. But what I have gathered so far is that when you get a hard money loan, you are required to put a down payment off of the total amount you are using for the BRRRR which includes purchase price and rehab cost. For instance, if I needed the Hard Money to cover 60k in purchase price and 40k in rehab costs, assuming my downpayment needs to be 25%, I would need to put down 25k of my own capital. Giving me a hard money loan of 75k. Again I haven't used hard money yet, so please feel free to correct me if I am wrong.

That being said, on the calculator when it asks for rehab costs, it never includes this cost in the Acquisition loan section you would need to get, so total cash needed includes the rehab costs. Shouldn't the calculator include the rehab costs in the Acquisition loan section? So total cash needed would be total downpayment plus fees to obtain this Acquisition loan? That way the interest only payment during holding is more accurate?

If anyone can point out where I am misunderstanding the calculator please let me know. Or if I just misunderstand the hard money process. Maybe @Brandon Turner can clarify some of this?

Thanks for any info anyone might have on this.