Brrrr question here

13 Replies

@Victor Funes

If your conservative you'll likely lose less money if something goes wrong. I personally always like to be all in for 70% of the ARV to be sure cause in most cases you'll have unforeseen expenses. Also when you refi your cashflow would be higher at 70% as opposed to 75% and with cash flow being important to me 70% makes the cashflow that much more higher.

@Victor Funes

It's a target, but if you leave a bit of cash in a good BRRRR it's not the end of the world. My last project went over budget and ended up leaving about $25k in a $275k property, but I still have an appreciating and cash flowing rental for less than if I had found a turnkey.

It is standard in the industry to calculate your rehab costs and then add five percent of the total budget for contingencies. The same principal applies to the entire deal. If you believe you are all in at 75 percent of ARV. Than that might be thin. What controls the outcome is the size of the deal. A small deal at 100K ARV 75K cost does not have a lot of room for miscalculation. While a bigger deal with an ARV of 565K. Purchase: 280 Rehab 125K ,all in 452K with lending and closing costs, is twenty percent clearance but much safer.