BRRRR: How to Calculate Total Cash Invested?
Hello BP Community!
I'm working through some BRRRR scenarios on the BP calculator and I'm having trouble figuring out how the "Total Cash Invested" is calculated. I tried to duplicate the number on a spreadsheet and can't come up with the exact number. The total cash invested in this example ends up being $2532.70. Here's the formula I'm using to try to duplicate that number:
Purchase Price + Rehab + Rehab holding costs - Rent period cashflow - rent period loan paydown - refinance loan amount = total cash invested.
$100,000 + $25,000 + $2,392.70 - $2,377.56 - $586.14 - $121,500 = $2,929.00
I come up with $2929.00 when I use this formula, which is close but not exact. Is there another metric I'm not including or a metric that I shouldn't include? Any help or input is appreciated!!!
Take out the loan proceeds and repayments. They distort the calculation. Only the interest payments should be recorded.
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@Alex Hohenstein I don't use "rent period cashflow" nor "rent period loan paydown" in my formulas at all. By the time a renter is in the property, I'm already refinanced out. Also, don't forget you have closing costs when you do this technique. You need a 1st round of closing costs when you BUY and a 2nd set of closing costs when you are at the REFINANCE step. So based on your numbers you should I show $3,500 out of pocket and then just add closing costs twice and that should give you a more accurate portrayal.
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