Did we just make a huge mistake?

[Chelsea Bergland]

Hi friends,

My husband and I are new investors. We'd planned to pay cash and BRRRR. But found a SFH in a prime location. It's a fixer upper, mainly cosmetic (carpet, wall paper, paneling etc) but the location puts it out of our price range to pay cash. We can do conventional with 20% down at 6% or commercial at 5%. Under contract at 221K. ARV is 280K.

Also worth noting that it’s in a highly desirable school district and within 2 miles to two major hospitals. So we’re thinking it could be a good rental to medical professionals or traveling nurses?

I'm estimating repairs would be 20K. It's a 3bdrm and only 1 bath. Not sure we could find a spot for a 2nd bathroom. If we could, the ARV would jump substantially. 3/2s are comping at $300K+ without any repairs. But I doubt the floor plan will allow for an additional bathroom, so that may be a moot point.

Long story short- I'm nervous that we're going the conventional route, instead of cash. I'm not sure the ARV is high enough given it's only a 3/1. But the location can't be beat, so maybe it's worth it? Any help with the math on this one would be appreciated- this is our first rodeo.

[Kristofer Koons]

Congrats on taking the plunge! As for the math goes I can do a full breakdown if you would like but to keep it concise it looks like you would leave about $20k into the property after refinancing once the rehab is completed. So not a "perfect" BRRRR, but still leaving less money into the property than a typical 20% down conventional