Is this a good BRRRR, would you do it?
Hello,
In the process of bidding on one of my first deals. I intend to BRRRR it and wanted to ask for your feedback. Here's the general info:
1. Owner is asking 80k for property. Comps in the area range from higher end rehabs (215k) to lower end (170k). Estimated comp for this property after rehab is 195k, although for my conservative numbers I'm using 175k.
2. Property was built in 1956 and will probably need some higher level rehab. I am roughly estimating 50k, bringing the purchase + rehab to 130k.
2a. I am "assuming" that the rehab would last 6 months, HOWEVER, have a GC that says he could do it in 6 weeks. I'm using the 6 month number to assume no rent would be paid during that time. This could probably be a better view but trying to be conservative.
3. Additionally, I would be using hard money (although going to try to work with a local CU) as owner is looking for cash and "as is". Requires a 10% down payment (13k) and 3 pts at 12% interest. I estimate the buying / closing to cost an additional 6,0000 for a total of $22,510 needed upfront.
4. Properties in the area rent for ~1,550 - 1,600, however being conservative I estimate rent payments being $1,500 a month. To refinance the hard money loan, assuming the home appraises for 175k would result in a loan (75% of 175k) at 30 years ($620.24/mo) + other expenses to cost (745/mo) to cash flow $129.36 a month.
5. Here's an image from the calculator I used below. I'd welcome your feedback and thoughts. Thanks!