BRRRR Calculator/Analyzer

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BRRRR Calculator/Analyzer

Brian Larson
Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes

I am not sure if this is the right place or not but I have recently bene going at the BRRR strategy exclusively and have build a spreadsheet that lets me quickly analyze a deal that comes across my inbox.

I hope this is useful to others. Pretty basic, just insert the inputs that are BOLD and then it will give you some analysis on the deal.

Default values are for an actual deal I am pursuing now.

For more info on BRRRR strategy see @Brandon Turner post here

You can find my file here

I welcome any feedback (good or bad) and as you can see by the current version I tweak often. I have tried my best to keep it clean and keep the !REF errors when values changed to a minimum :)

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Jon Krachenfels
Investor · Springboro, OH · Member since 2015 · 32 posts · 15 votes
11y

Hey Brian when I click the link I am directed to s page that says,  "file does not exist"

Best Regards, 

Jon 

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  • Brian Larson
    OP
    Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes
    11y

    Here is a screen shot so you can see what it has in it before downloading

    2Reply
  • Jon Krachenfels
    Investor · Springboro, OH · Member since 2015 · 32 posts · 15 votes
    11y

    Hey Brian when I click the link I am directed to s page that says,  "file does not exist"

    Best Regards, 

    Jon 

    1Reply
  • Brian Larson
    OP
    Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes
    11y

    Well that's not good. The link works for me so not sure what's up.

    Maybe see if you can hit my fileplace and then click into file from there?

    http://www.biggerpockets.com/files/user/peeklay

    Or here

    2Reply
  • Tammy Vitale
    Investor · Lusby, MD · Member since 2015 · 121 posts · 36 votes
    11y

    looks really interesting - I tried both ways and both indicate "page not found".  Don't you just love technology?

    0Reply
  • Brian Larson
    OP
    Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes
    11y

    I am not sure why my BP fileplace is locked down. Maybe I need to be a Pro member? not sure.

    I reuploaded again here:

    http://www.biggerpockets.com/files/user/peeklay/file/brrrr-calculator

    I also put the file on OneDrive. It is located here on Onedrive. sorry about this issue.

    http://1drv.ms/1h3gXqA

    1Reply
  • Rachelle RodaviaPro Member
    BiggerPockets Support · Manila, Philippines · Member since 2015 · 1k+ posts · 148 votes
    11y

    @Brian Larson

    Happy to help! Sent you a personal message to get this resolve.

    BiggerPockets
    0Reply
  • Jim Brown
    Millersville, MD · Member since 2015 · 140 posts · 47 votes
    11y

    link worked for me...

    0Reply
  • Brandon Stevens
    Investor · Lexington, KY · Member since 2015 · 139 posts · 100 votes
    11y

    Cool idea, Maybe add spot for taxes, insurance, and management totals. 

    0Reply
  • Ingrid J.
    Investor · Tromsø, Norway (Europe) · Member since 2015 · 431 posts · 194 votes
    11y

    Thank you! I have not tried to do a similar deal myself, but the link worked.

    0Reply
  • Andrey Y.
    Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes
    11y
    Originally posted by @Brian Larson:

    I am not sure if this is the right place or not but I have recently bene going at the BRRR strategy exclusively and have build a spreadsheet that lets me quickly analyze a deal that comes across my inbox.

    I hope this is useful to others. Pretty basic, just insert the inputs that are BOLD and then it will give you some analysis on the deal.

    Default values are for an actual deal I am pursuing now.

    For more info on BRRRR strategy see @Brandon Turner post here

    You can find my file here

    I welcome any feedback (good or bad) and as you can see by the current version I tweak often. I have tried my best to keep it clean and keep the !REF errors when values changed to a minimum :)

     What do you mean by "Rehab Contingency"? Thanks!

    0Reply
  • Brian Larson
    OP
    Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes
    11y

    Originally posted by @Andrey:

    What do you mean by "Rehab Contingency"? Thanks!

    I use this as my 'buffer' on the rehab estimate. I have found that different GC's estimates can be aggressive and others conservative. Heck, one of my guys for my flips is pretty much always within 1% of estimate so I don't buffer but another guy consistently needs more so I put in a 10% buffer.

    For the sake of the calculation it is simply adding that percentage amount to the Rehab estimate cell. you can keep this 0% and do the math yourself if you like when entering

    brian

    0Reply
  • Brian Larson
    OP
    Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes
    11y
    Originally posted by @Brandon Stevens:

    Cool idea, Maybe add spot for taxes, insurance, and management totals. 

    Brandon, I will likely expand this over time with taxes, insurance, etc but am simply using the NOI ratio for now. Basically I change this ratio based on my market knowing that it is close to 50% in Indy, but is better and closer to 55% in KC, etc.

    By keeping it a little more vague I thought others could then apply their own percentages for maintenance, vacancy, capex, etc. I use 10% for main/capex, vacancy and PM but some folks will individually manage, not save for capex, have lower vacancy, etc...

    thanks for checking it out.

    b

    0Reply
  • Justin B.
    Orange, CA · Member since 2014 · 15 posts · 7 votes
    11y

    Thanks for sharing!

    0Reply
  • Dax Middlebrooks
    Spring, TX · Member since 2015 · 25 posts · 17 votes
    11y

    @Brian Larson

    Love it!  Thanks for sharing.  

    Dax

    0Reply
  • Andrew Hofing
    Pittsburgh, PA · Member since 2013 · 82 posts · 17 votes
    11y

    Hi @Brian Larson this appears to be a great resource. What is Delta of Offer over 75% of ARV? Also, what is the NOI ratio, Is it amount of operating income compared to expenses? Why is greater than 50% is better? Also, how do you gauge things; ie if you have 4 yellow and 4 green?

    Thanks,

    Andrew

    0Reply
  • Brian Larson
    OP
    Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes
    11y

    hey @Andrew Hofinggreat questions.

    I have the long answer for delta and short. :)

    LONG: Delta of offer over 75% of ARV is a figure showing how much we are paying over the 75% ARV threshold. This is in the case where maybe you make an offer that puts your purchase+rehab right at 75% but then they counter back a little higher. If you plug in the numbers you will see exactly how much over 75% threshold you are and if you want to do the deal anyhow. Think of it this way. Lets say you have a solid deal, great cashflow, location, DSCR, etc but you have to pay $2500 over the 75% mark, would you do the deal and just consider that the cost of a down payment once you refi? Maybe, maybe not.

    SHORT: BRRR is not perfect and sometimes you cannot get everything under the 75%, this cell tells you how much you would have to pay in order to refi with the current ARV and costs to purchase/rehab

    NOI Ratio is what I am applying against the monthly rent (think 50% rule). This is net operating income thus the higher this amount the more you are getting to keep with that rent. The lower the less you keep. You are stating it in terms of expenses which is part of the equation but this is the income part of equation thus higher is better. Example: 50% ratio says I keep $500 of $1000/mo rent. 55% says I keep $550 of that $1k.

    As for gauging the deal, the greens and yellow are simply quick glance items. you have to apply your personal preferences. I put more weight into Cashflow and CoC Return than I do the others. So for instance, lets say you have a property spinning off $200/mo cashflow in years 2+ but the DSCR is yellow because its at 1.3 and the cap rate is yellow because its at 7.5%. That is a deal I would still do. I strongly prefer to have 1.4 or higher DSCR and I like a higher cap rate (as compared to the notes I buy) but they do not outweigh the $200/mo cashflow and are not BAD ENOUGH to kill the deal.

    With that said, you mix in reds and we likely have a problem.

    I hope that helps

    0Reply
  • Brian Larson
    OP
    Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes
    11y

    To follow-up the question by @Andrew Hofing and my post above, I came across a deal today that is very interesting. This spits out that scenario that Andrew asked. What do I do if my metrics are mixed?

    Here are the outputs on this property:

    At first glance it may not seem worth it due to the DSCR and Price to Rent ratio but when you dig in and know the neighborhood of this house and the schools (all are 9-10 rating) and he fact that its an A+ area...well then it starts to make a lot more sense.

    Especially with that ARV%. This may turn into a flip and then walk from there.

    As you can see, the spreadsheet can do what it does but NOTHING is tried and true rule and you have to add outside factors that may not be quantitative in nature.

    Brian

    0Reply
  • Jon Krachenfels
    Investor · Springboro, OH · Member since 2015 · 32 posts · 15 votes
    11y

    Thanks @Brian Larson I was able to download it off of your OneDrive link. 

    Best Regards,

    JK

    1Reply
  • Jeff V.
    Investor · Deridder, LA · Member since 2014 · 298 posts · 185 votes
    11y

    @Brian Larson

    Tried out the spreadsheet it is a nice product.

    I would add in more detail for your permanent financing such as a term...  Your spreadsheet assumes one will be financing with 30 yr loans.  Someone may only have available 15 yr loans or want to use a shorter term loan due to some other constraint.  It would be nice to have that capability.

    An example would be my 2 lenders here only will do 15 and 20 yr loans being the property will be non owner occupied and is owned by an LLC. They pass the loan off to their commercial division and those are the only packages they offer. On a 20 yr the property has to be less than 5 yrs old. My "Bridge" financing is a LOC which has no term so one can pay interest only during the rehab/hold period.

    Just offering constructive criticism.  Hopefully it will help, if not please disregard.  It really is a nice spreadsheet app.

    Thanks,

    Jeff

    0Reply
  • Brian Larson
    OP
    Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes
    11y

    hey @Jeff V. thanks for the feedback. Its funny because I created this initially to allow me to quickly analyze a property per my BRRR methodology and then I would move all of the data into my 'real' analyzer spreadsheet. Over the past month I have began to use this more so I should probably take your feedback and@Brandon Stevens feedback and just evolve this into a full calculator/analyzer.

    Making your change will be super easy and I also want to have a variable for ARV% target. if you are refiing into conventional with units 1-4 than 75% is fine, but with 5-10 it needs to be 70%.

    Look for an update in the next week+ I will update here.

    b

    0Reply
  • Daria B.
    Rental Property Investor · Gainesville, FL · Member since 2015 · 1k+ posts · 432 votes
    11y
    Originally posted by @Brian Larson:

    hey @Jeff V. thanks for the feedback. Its funny because I created this initially to allow me to quickly analyze a property per my BRRR methodology and then I would move all of the data into my 'real' analyzer spreadsheet. Over the past month I have began to use this more so I should probably take your feedback and@Brandon Stevens feedback and just evolve this into a full calculator/analyzer.

    Making your change will be super easy and I also want to have a variable for ARV% target. if you are refiing into conventional with units 1-4 than 75% is fine, but with 5-10 it needs to be 70%.

    Look for an update in the next week+ I will update here.

    b

    Hi Brian ,

    Stumbled on your thread and looked at your spreadsheet analysis. Thanks for contributing. I downloaded and compared with 2 other spreadsheets that I use and this appears to be a very nice  'quick' analyze to look at the metrics differently but come to the same conclusion. Essentially, with the outside factors as you mentioned like neighborhood and schools, the numbers bounce out with just minimum input.

    0Reply
  • Brian Larson
    OP
    Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes
    10y

    I have had a few folks ask for my latest version of the file. I am actually a bit surprised at how many downloads this has, I hope it helps people. 

    The file is in my fileplace and is version 1.3. There are many updates so if something is odd feel free to ask.

    2Reply
  • John Higgins
    Beverly Hills, CA · Member since 2016 · 4 posts · 0 votes
    10y

    Thanks for sharing this Brian.

    In the "input" section. Some of the variables titles are BOLD like "Rehab Contingency" and some aren't like "Calculated Offer Variance from List Price". Yet all of the data to the right is BOLD.

    I'm just not clear on which cells should be modified and which ones just show calculations.

    Also, the row that shows "Expenses". Is that a monthly expense and is that separate from the "Expenses" tab that calculates Tax, Insurance, Vacancy, etc.?

    Thanks again for sharing your calculator.

    0Reply
  • Nelly Licona
    San Antonio, TX · Member since 2015 · 27 posts · 5 votes
    10y

    @Brian Larson, 

    Thanks for sharing! This is indeed a great spreadsheet! I'm currently researching apps and spreadsheets to see what to use. Yours is pretty cool. Since I'm still on the learning curve, I am wondering if there are tolerances or ranges for each of the percentages that could potentially result form your calculations.i know about the 2% rule, but what about the rest of the values? 

    Thanks in advance for your response! 

    0Reply
  • Brian Larson
    OP
    Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes
    10y

    @Nelly Licona Sorry, I could have sworn I hit post reply last week...ugh.

    I am not 100% sure of what you mean by tolerances/ranges but let me know if this helps. All items on the right are calculations from the data on the right. I have targeted the numbers I like to see. For instance, I need my CF to be over $125/month in order to go green but some people may want it to be $200 in order to be green...some just a $1.

    I listed each indicator below and why I settled on it. Hopefully that helps.  

    Cashflow - personal preference
    DSR - lender - this is something my lender uses so I need to be below .65
    DSCR - lender & personal - most banks require 1.25 DSCR but I like more wiggle room. Ben Leybovich wrote a good article on what to target.
    COC Return - personal - many agree that anything over 15% is great. with BRRR it can be really great :)
    Cap Rate - personal/area specific - I target an 8 cap but that is totally up to you and your area
    IRR - personal - if you can get an IRR of 20% in an investment you will likely be happy. As you can see, with BRRR your IRR can be insane (in a good way)
    Price to rent - personal - this is your 2% rule. I personally care less about this almost any other category. that 'rule' is really just a back of the napkin gate to see if a property pencils before deeper analysis. I only include this here because people like to see it
    ARV - lender - I have to be at 70% or less for refinance. you can toggle the number on the left and it will work the math to get close. This just tells you after its all said and done (maybe you override the actual offer price field) what your ARV is
    Equity - personal - I am targeting $25k in equity in order to do a deal. this WILL make finding deals harder but its what I have set as my bar. Note that I sometimes do deals with smaller equity (they CF well)  but I need $25k avg in order to achieve my yearly and long term goals.  

    1Reply
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