Springfield, IL – BRRR Analysis

7 Replies

Hey folks,

Not yet familiar with the Springfield area, but wanted to see if anyone had thoughts/suggestions on the analysis of the following BRRR deal: https://www.realtor.com/realestateandhomes-detail/...

This is a side by side duplex, one side currently rented, one requires repairs and rehab. There is still more due diligence to be had here, but trying to get in the habit of good analysis practice to aid in future deals. 

Asking Price: $23,900

MFR: 1/1 on each side

** Will need more information on current rent and rehab costs, but median 1/1 rents are $550 for the area according to rentometer

Offer Price (~4k below asking): $20,000

Rehab Cost (est.): $25,000

Closing Costs (est.): $3500

Total Cash Invested: $48,500

ARV: $57,000

Rent after Rehab (combined): $1000

Expenses:

Property Tax: 30 / month ($350 / year)

Insurance: $17 / month ($200 / year)

Vacancy at 5%: $50

Maintenance & Repairs at 5%: $50

Trash: $15

HOA: $0

Gas & Electric: Tenant Paid

Water & Sewer $75

Misc: $0

Property Management at 10%: $100

CapEX at 5%: $50

Total Monthly Expenses:  $387

M&I after Refi @ 80% of ARV (45,600): $245

Monthly profit after refi: $368

CoC (after refinance): 9.2%

Questions I'm hoping for some help with:


1) For hard money loans, do you typically pay interest only until the term of the loan is up when the remainder is due? If that's the case monthly payments on a 12% hard money loan of $45k would be around $430 / month over 12 months. This would still make the deal cash flow positive once renovation is complete on the vacant side.

2) Any thoughts on the above analysis? I know it's messy – I've tried to clean it as best I could but appreciate any help or feedback :)

3) Any other tips, tricks, or suggestions for this deal? From my math it looks like one that would be worth looking into further (neighborhood due diligence, more pictures of the vacant side, etc.), but would love to solicit some other thoughts.

Thanks!

Andrew




Hi @Andrew Fernquist If you need any help or need contacts I have a couple great ones I would highly recommend.  Do you have a PM? will you be utilizing one? Also, I would probably not do hard money and get a commercial loan which would be much cheaper...I have a contact for that as well.  Your insurance looks low...I would guess its probably closer to $500 a month or so.  Property taxes you should take the exact tax from Sangamon county website.  The water and trash should be close to exact numbers, I would call utility company and as for average bill the last year or 2.    Send me a pm if you have further questions or need specific contacts.  Would be happy to help and can recommend people I have used for Rehab.  Best of luck!

Thanks, Twana!

Taxes I took from the Sangamon country website although I'd certainly call to verify since the numbers are a bit confusing (https://tax.co.sangamon.il.us/SangamonCountyWeb/ap...).

@Michael – Good point. From what I could find on the county website I was making a guess that $350 would be appropriate for ARV, but I think a call to the county would be in order to verify.

Thanks for the pointers!

I think the analysis is mostly fine. Insurance would probably be about $650-$850/ yr. CapEx could be a bit higher because I think the tenant turnover would be high. I would just be worried about trying to refi at the ARV of $45,600. I'm pretty familiar on this area and I don't think the area would support that value and would be hard to find someone to refi it.

Hey all, just reading through this. I agree with @ ZW Reed, 57 is too high for after repair in that area. Once rehabbed and pulling in rents, your value could come close to 30 grand.

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