BRRRR - am I getting it right?
Before I actually make my first BRRRR purchase I wanted to make sure I'm getting it right. Let me know if I'm forgetting something in my numbers below please:
| Buy | |
| purchase price | $50,000 |
| down payment of 20% | $10,000 |
| closing costs | $2,000 |
| total acquisition costs | $12,000 |
| initial mortgage payment | $191 |
| Rehab | |
| rehab costs | $30,000 |
| 6 months holding costs | $3,000 |
| rehab costs + acquisition costs ($12k) | $45,000 |
| Refi | |
| house appraises for | $125,000 |
| cash out for 80% of that | $100,000 |
| cash out ($100k) minus total costs ($45k) and initial principle balance ($40k): | $15,000 |
| new mortgage principle balance: | $100,000 |
| new payment is: | $477 |
| Rent | |
| Market Rent | $1,200 |
| monthy profit (not including expenses other than debt service) | $723 |
| Repeat | |
| Investment Costs ($45k) plus cashout ($15k) | $60,000 |
| Annual rental profit | $8,676 |
Am I doing it right?