Newbie running BRRRR numbers in FW, criticism welcome!

10 Replies

Seeking advice/criticism on the numbers I'm running for a certain property. I want to make sure I am looking at the right resources for projected rent, ARV/comps, and make sure my repair estimates are not completely off. The numbers seem to be very good on a certain MLS deal I've found which leads me to question: if the numbers look this good, how did this even make it to the MLS without being snapped up, much less sit on the MLS for 15 days!? This led me to question my rent estimate resources and ARV estimates... Hoping to find out from the community if my numbers are off, how can I improve where I get the numbers to refine my number crunching process in the future.

Okay enough prologue, here's the deal:

3003 Finley St, Fort Worth, TX, 76111 (United Riverside)

4 bed, 2 bath, 1570sf, built 1951

Asking $84,900

Estimating $25,000 in repairs (roof is 2 years old) needs: vinyl floors, new countertops, appliances, HVAC, possibly re-wiring, trim/doors, and paint.

Estimated ARV: $150,000 (I base this on 3 bed 2 bath comps ~1350sf only a few blocks away selling for $159k to $185k, roughly $100/sf to me seemed like a conservative estimate)

Estimated rent $1400/month (I based this on Fair Market Rent chart for 76111 from section 8 housing which lists 3 bed at $1350 and 4 bed at $1720, plus several 3 bed 2 bath rentals currently available a few blocks away at $1350/month)

Running BRRR numbers with $80k cash purchase, $25k rehab, refinance at $105k, %10 capex/repairs, 10% vacancy, 10% management fees led to a monthly net cash flow of about $200.

Is there something I am missing about this deal that I need to account for? Neighborhood doesn't seem like a war zone, is it? Is $1400/month rent way off? My ARV off?

Or are my numbers pretty solid and I just announced a deal to the entire BiggerPockets community that has somehow slipped through the cracks thus far?

That probably looks close.  Rent might be slightly high, but I have never had either side of a rental there.

With 1950s house in that area, you should also budget for sewer line replacement if it hasn't been done yet.  You may want to do all the electrical as well with new panel and it may be time for plumbing as well.  So not sure your $25,000 includes that.

My quick look at your numbers make me think your all in is $105,000, but can you refinance 100% of that....or is that your base and you finance 80% or whatever your loan allows.

@Bruce Lynn The plan would be all-in cash investment of $105k. If/when the home appraises for $150k, refinance 70% of that $150k thus pulling my initial $105k out and leaving $45k of forced equity still in the deal while still cash flowing $200/month. 

Offer would be contingent on sewer scope and I budgeted $5k for rewiring in the $25k rehab. 

Thanks for the feedback!

@Collin Placke then it sounds like you are pretty much on track.  If the sewer line has not been replaced, how long do you think the 70 year old pipe will last?  The average lifespan of cast iron drain/sewer pipe is 50 to 65 years.  Remember all the gas leaks in North Dallas last year....and neighborhoods evacuated.   You can normally see if it has been replaced with PVC at least at the cleanouts.

Looks like a good deal. Checked the CAD and appears the same little old lady lived there from 1980 - 2018 and was passed onto family. I'd agree with Bruce the rent could be slightly high but close. Neighborhood doesn't look like a war zone, the $25k in likely rehab may care some people off as an investment in this level of property. Most of it looks fairly cosmetic and cleanup as you would expect. I'd take a hard look at any real capex projects as mentioned above (plumbing, electrical, structural) otherwise looks like a good BRRR project.

@Collin Placke if your ARV and construction costs are accurate then it would seem to be a good deal. It's hard for us to really know your ARV without knowing what your finishes are and the same with the rehab costs. But if you know how to calculate those accurately then this is a deal I would say yes to. Also, just in case, I would not include addresses on public posts like this. It's good enough for us to know the neighborhood and zip code. Just don't want anybody to snipe a deal from you. Good luck!

Are you doing the work yourself or using a GC? 25k seems a little low especially considering the AC and electrical work. That sure is a tiny house for 4 bedrooms. If I were you I would assume at least $20/sqft if you are using a contractor. Especially with a house that age. If you do everything yourself you are probably good with that estimate. What about foundation? I realize as a cash deal and rental it doesn't matter but almost everything in North Texas has foundation problems which could mean plumbing problems if it is a slab. Put slab leak coverage on it if you hold on to it. I'm curious, are you planning on keeping and painting the wood paneling or removing it all? I recommend talking with @Andrew Postell before purchasing to help you plan out the refinance and get all your money back. He is helping me on one I have in Fort Worth right now. Good luck

What about property tax and insurance?

Sounds like it could be an okay deal with an offer contingent on sewer scope and foundation eval. Thanks for the responses, I was mostly looking to see if my numbers were drastically off, or if I was on the right track for the most part. 

@George Blower thanks for the welcome, I have been roaming this site daily for months!

@Peter M. I would be using a GC, appreciate the slab tip. I grew up in north Texas and I definitely remember my childhood house having foundation repairs done.  

@Mike Freeman those numbers included property tax and an insurance estimate. 

Your rehab budget might not be to far off. What is leading you to believe you need new plumbing and electrical? The age of the property doesn't always mean things aren't still functional, and safe. If it needs foundation, the elevation variances are really what would impact your sewer lines, if this is a slab home. It really doesn't happen as often as people think. Pier placement plays a big role as well.

As far as electrical, Zinsco and Federal Pacific brand breaker panels are the 2 big no-no's. Plenty of homes in our area still have aluminum wiring and are perfectly safe (hopefully it doesn't, obviously). I would say there needs to be some substantial deficiencies in safety/function to really make it worth the cost to rewire the house.

I am a contractor in the Dallas/Fort Worth area that exclusively works with investors. I do a lot of pre acquisition consultation. If you haven't closed on this property, I would be glad to come walk it with you if there is access? Just throwing it out there.

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