1st Post - BRRRR - Looking for opinions on this deal
First time posting...I'll try to be concise.
Found a 3-2-2 listed for 150k. Rental comps are $1600-$1700 month.
Assuming full price offer accepted, the plan is to do 20% down (30k) with a 10k rental rehab and assuming $2500 closing costs. Total out-of-pocket $42,500. ARV should be around 210k.
Plan would be to refinance $156,750 at 8% for 30y giving me back my out-of-pocket plus 10%, but that would create a negative cashflow for the first and second years. -$4700 the first year, and -$750 the second. However, I could take the 10% I got on my out-of-pocket and put it aside to offset that negative cashflow. I don't plan to use this property for cash flow right now. It would basically be a free house that would cash flow eventually and build equity. And it would still hold a good bit of equity from the start if I need to HELOC it for future deals.
I ran the BRRRR worksheet on it and it shows a horrible CoC return until the 4th year, but after that, it cleans up and shines with CoC at 31.98% at year 5. The annualized return is fantastic, beginning at 950%, and over the course of 10 years would land at 43.3%. I'm aiming to hold for at least 10 years because that coincides with my retirement age...I'm a late starter!!!
I would like to do one of these a year for the next 10 so I have my retirement taken care of and then re-evaluate my situation. And I plan to add some multi-family or STRs in the meantime for cashflow.
So my ultimate question is...does this look like a deal worth making?