First time investor! Input?

Question

First time investor here. The numbers on this deal make sense, but I'm hoping for additional input to make sure I'm not overlooking anything major.

I am planning on using a HELOC to do my first BRRRR. The property is a 900 square foot condo that functions well, is just out dated. It needs paint, flooring and a couple appliances. I have an experienced property manager/realtor helping with this. The specifics are as follows:

• HELOC - $55,000
• Purchase Price - $37,500
• Closing Costs - $4,000
• Rehab - $15,000
• Rent price - $1000 (includes $165 HOA fee)
• ARV - $73,500 (purchase price of the exact same condo 2 months ago)
• Cash out refinance (75% of ARV) - $55,125 (pays back HELOC)(Already have lender lined up for 6 months post-close)
• (Already have lender lined up for 6 months post-close)
• Post-refinance cash flow - $225 conservatively 
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• (Already have lender lined up for 6 months post-close)

Six months out, I want to have a cash flowing property for minimal money out of my own pocket. I do have an extra $10k in capital I can comfortable spare for if (when) unexpected things come up.

Plans fail for a lack of counselors. Any additional things I should be considering?

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Michael Queen · Answer

This is all reassuring to hear, thank you for the input! Everything looks great on paper, but when it comes to actually pulling a $55k HELOC for the first time, the additional "eyes" on this is helpful.

Long story short, I found the seller through word of mouth and the seller doesn't need the money  and just wants to get rid of it, hassle free. He also thinks the market value is $50-$65k, but I'm not going to tell him he's wrong.

It is a 2 bedroom, 1 bath. Has a private garage, community pool, balcony, etc. A small, simple condo, but good "extra" amenities.

I know somebody (how I found the deal) who just purchased the same condo next door in January and paid $73,500 with minimal updates, so I'm basing ARV off of this. Also, my property manager knows somebody renting a 3 bedroom in the same condo development for $1,100. I plan to use that as a comparison and reduce by $100-$150.

Stephen Brown · Answer

I'm curious if you could link up your comps to this property. Buying at $37k and the ARV is $73k with minor repairs?

Damaso Bautista · Answer

@Michael Queen

Hey Michael,

Those numbers are really nice.  If you found this then you have a good thing in your hands. I say go get it because those numbers are hard to find in today's market.

Good luck!

Jaron Walling · Answer

Purchasing for $37k and rents for $1000 per month. What's the and bedroom/ bathroom count? Those are good buy and hold numbers especially in 2021.

First time investor! Input?

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