All of a sudden I cannot figure out simple math to save my life. I am trying to place the numbers below into the BRRRR Calculator but it is spitting out some weird numbers and I'm not even sure where to start. Before I go any further...I'm not pursuing this deal at this purchase price but simply trying to get the simple math down which all of a sudden doesn't seem simple.
The fist photo is what I received back from a HML after I sent them a "hypothetical" deal. I am wanting to run through the numbers as a practice run before I jump in. The other photo is what I placed into the BRRRR Calculator and I am trying to see where I went wrong. $150k needed at closing? I also added 3 points and fees into the calculator. So confused.
I haven't used this calculator before. I have a homemade calculator. What were you hoping this calculator could do for you?
@Max Keller I was hoping it would reflect all the closing costs that I entered and all the data I entered but its not pulling it correctly or I am entering it wrong. I'm trying to evaluate some deals and its hard to know if the deal is good or not based upon what the calculator is spitting out.
You didn't enter the loan amount. If you look into the Acquisition section, it's listed as $0, so it's assuming you're buying the property with cash from the get go. Go back to the first few pages of the calculator and enter the hard money loan amount you'll be using for initial purchase. That's the way BRRRR works, you buy a property with hard money (or private money), rehab, refinance and rent it out.
@Anton Ivanov Thanks for the info Anton. Do you use the online calculator and if so how do you like it?
@Anton Ivanov so the "purchase" price on the first page would be the total loan amount from the hard money lender correct? Here are the new numbers I received form the HML and what the Calculator is spitting out This is a bad deal I see that but I am just trying to get this calculator down.
Also in the calculator is "Total Cash Needed At Purchase" just that? Cash in hand to buy the home with the HML?
No, the purchase price is just that - the purchase price. On the second tab of the BRRRR calculator, scroll down to the section titled Purchase Loan Details. That's where you need to enter the hard money loan details you're using to buy and rehab the property.
If I'm reading your sheet correctly, here is what you should put in the calculator:
Purchase Price: $110,000
After Repair Value: $175,000
Purchase Closing Costs: $0 (but could include finder's fee, inspection fee, etc. if you have any)
Estimated Repair Costs: $32,000
Purchase Loan Details
Cash Purchase: no
Down Payment: Click Provide Actual Value
Enter Loan Amount: $122,500
Interest Rate: 11.99%
Other Charges From Lender: $6,667.50 (can also be entered under Purchase Costs above instead - but not in both places)
I don't know the answers to the rest - those will depend on the exact loan terms they're offering you.
The next section is "Refinance Loan Details" - I think you've already filled it out. This should include the hypothetical long-term (conventional) loan you will use to refinance into after the rehab work is complete.
There are better ones out there, but it's a good starting point.
@Anton Ivanov man thanks for the help!!! I think I got it right this time.
I think so, I looked over the screenshot and don't see any glaring errors. Just make sure all of the numbers you're inputting are correct and I would do this a few times for different properties until you feel comfortable.
Also, what helped me when I was starting out is actually go through the math (at least some of it) with a calculator and just understand how it's calculated. If you don't know what some of the terms mean (like cap rate, ROI, etc.), search up at the top and there will likely be a blog post that goes over the formula in detail.
@Anton Ivanov good point. I took your suggestion and started doing the numbers by hand after I run the BRRRR Calc so that I understand how they got to the number they did.
Howdy @David Olson
A couple of additional items to add.
You are showing $0 for Purchase Closing Costs and $6,668 for Acquisition Loan Points/Fees. If you look at the report from the HML you will see an entry Origination Fee $3,675. This is your points amount ($122,500 x 3%) and is the amount that should be reflected in the Acquisition Loan Points/Fees block. The difference ($6,668 - $3,675 = $2,993) would be included in the Purchase Closing costs. Do you anticipate any additional closing costs?
In the BP BRRRR Calculator there is no entry for Holding Costs. You still need to account for them. A common practice is to include them in the Rehab costs so they are accounted for in the analysis. The Holding costs would not be part of the HML loan of course. These are your direct costs incurred during the Rehab period up until the property is fully rented or sold. The Holding costs include HML interest payments, insurance, taxes, utilities, etc).
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