(FUNDING QUESTION) First Time Investor Looking At Properties

2 Replies

I've found a few homes that seem like great BRRRR opportunities, but I don't know how to go about funding the deal. These seem like great opportunities, but being a newbie I realize I could be missing a lot of why these homes haven't sold yet.

Can someone let me know if these deals are worth pursuing? And if they are, how to go about marketing this deal to get the funding.

https://www.zillow.com/homedetails/413-Coventry-Ct-Shreveport-LA-71115/51347813_zpid/

https://www.zillow.com/homedetails/1521-Concord-Dr-Shreveport-LA-71105/51345387_zpid/

If they are on the MLS ... it is unlikely. Can you help answer a few questions about these properties (without my jumping into Zillow and running the numbers myself?)

#1 - What will the rent for conservatively?    I usually get this information off of rent-o-meter.
#2 - What is the after repair value.   This is tricky to come up with.   I usually ball park it by taking past 6-12 month sales comps of similar properties sold within a mile of the subject property.    Figure out how much per square foot each one sold and then multiple that number by the sq footage of the subject property.
#3 - CAP Rate = (Monthly Rent * 12 *.6) / purchase price. What is the CAP rate for each one of these properties?
#4 - How much rehab do they need?    This is a really tough one to estimate.    Might be worth having a contractor walk the property with you if these are your first deal(s).
#5 - Finally ... you need to be "ALL-IN" at 70% of ARV. So Purchase Price + Conservative Rehab Estimate = < 70% of ARV.
#6 - Use the biggerpockets calculator to make sure it will cash flow with Debt service.

Cheers!

Paul 

After looking at what you suggested and going through the rental income calculator on this (amazing) site, here's what I've got! This property is the one that will most likely work. https://www.zillow.com/homedetails/1521-Concord-Dr-Shreveport-LA-71105/51345387_zpid/

#1 - 1500 is the comparable rent in the same area, bedrooms, and square footage

#2 - This house is good to go as is, but could use minimal updating. Based on comps from the neighborhood and the street it's on, the ARV would be 190,000+

#3 - CAP Rate 7%

#4 - Rehab would be $25,000

#5 - aaaaaand this is where it goes sideways...looks like I'm at 90% of ARV. If this is too high is it too risky?