Investor · Fayetteville, AR · Member since 2022 · 31 posts · 7 votes
I know this question is fairly subjective, but assuming you got your entire initial investment back, including closing and holding costs and the property was only cashflowing 300-500 bucks after accounting for mortgage, interest, taxes, maintenance, utilities, vacancy etc. is that still a decent enough amount that you guys would still do deals like this considering the present interest rate environment?
Lender · 92703 · Member since 2022 · 326 posts · 538 votes
3y
$300-500 Cashflow in this market is a huge win! Obviously if you can get more even better. If you can find deals that cashflow like this do it. What market would you say you can find these 300-500 cashflow?
'All day long and twice on Sunday'! Anytime you have zero into a property and you have a descent cash flow - and $300-500 in such a situation after a refi and after all your expenses would be great!
Keep in mind though - that if you refinanced the house as a typical part of your BRRRR, it is highly likely that the tax assessor will use the new refi value of your house to reassess the taxes on your property. They essentially treat the refi as a new sale and raise your taxes accordingly the following year... so that part can be a bit of a drag.
My tax assessor explained to me that it isn't a completely linear (straight line math) process. That they will look at other similar sales and compare yours to the average. So if yours was ridiculously undervalued, they would go with a more average higher "just" value, and the same thing to the high side - if you got a great appraisal for your cash out and it looks like your property isn't worth as much as it appraised for (compared to other recent sales), they would go lower on the taxes.
I know this question is fairly subjective, but assuming you got your entire initial investment back, including closing and holding costs and the property was only cashflowing 300-500 bucks after accounting for mortgage, interest, taxes, maintenance, utilities, vacancy etc. is that still a decent enough amount that you guys would still do deals like this considering the present interest rate environment?
Yes, that is very solid cash flow in my opinion. Why does the interest rate matter if you're getting that cash flow?
Real Estate Agent · Member since 2019 · 143 posts · 74 votes
3y
The decision of whether or not to invest in a property that is only cash flowing $300-500 per month depends on a variety of factors, such as your overall investment strategy, risk tolerance, and market conditions.
Lender · 92703 · Member since 2022 · 326 posts · 538 votes
3y
$300-500 Cashflow in this market is a huge win! Obviously if you can get more even better. If you can find deals that cashflow like this do it. What market would you say you can find these 300-500 cashflow?
Rental Property Investor · Youngstown, OH · Member since 2023 · 128 posts · 124 votes
3y
Pretty much every property I BRRRR cash flows between $300-500 with $0 to ~$10k of my own money still in it, and frankly, I'm absolutely chuffed with those numbers. I'd call it a win.
Rental Property Investor · NY · Member since 2018 · 126 posts · 42 votes
3y
This is going to be a personal preference. What the CCROI? How much time are you putting in? Are you self managing? What kind of property (A class or C-class?) This is a question of risk and value of your time.
I know this question is fairly subjective, but assuming you got your entire initial investment back, including closing and holding costs and the property was only cashflowing 300-500 bucks after accounting for mortgage, interest, taxes, maintenance, utilities, vacancy etc. is that still a decent enough amount that you guys would still do deals like this considering the present interest rate environment?
Yes, that is very solid cash flow in my opinion. Why does the interest rate matter if you're getting that cash flow?
Thanks for the feedback Paul! Well it's it will cashflow now at higher rates of interest, but will be better in future if rates were to go down.
'All day long and twice on Sunday'! Anytime you have zero into a property and you have a descent cash flow - and $300-500 in such a situation after a refi and after all your expenses would be great!
Keep in mind though - that if you refinanced the house as a typical part of your BRRRR, it is highly likely that the tax assessor will use the new refi value of your house to reassess the taxes on your property. They essentially treat the refi as a new sale and raise your taxes accordingly the following year... so that part can be a bit of a drag.
My tax assessor explained to me that it isn't a completely linear (straight line math) process. That they will look at other similar sales and compare yours to the average. So if yours was ridiculously undervalued, they would go with a more average higher "just" value, and the same thing to the high side - if you got a great appraisal for your cash out and it looks like your property isn't worth as much as it appraised for (compared to other recent sales), they would go lower on the taxes.
Thanks so much for the feedback! That's a great point I hadn't considered on tax assessment! I need to redo my calculations at a higher tax value. I'd done it originally on the costs as it seems like in this area the tax assessed value is significantly less than what it sells for. Hopefully that doesn't completely wipe out the positive cashflow.
$300-500 Cashflow in this market is a huge win! Obviously if you can get more even better. If you can find deals that cashflow like this do it. What market would you say you can find these 300-500 cashflow?
Arkansas! These are all projections though, whether or not it will actually cashflow really depends on how well the numbers I've done will match up with reality! So fingers crossed!
Pretty much every property I BRRRR cash flows between $300-500 with $0 to ~$10k of my own money still in it, and frankly, I'm absolutely chuffed with those numbers. I'd call it a win.
Thanks so much for the feedback Alex! Ok good deal, just wanted to see if that was a relatively normal return for a BRRRR!
This is going to be a personal preference. What the CCROI? How much time are you putting in? Are you self managing? What kind of property (A class or C-class?) This is a question of risk and value of your time.
Hey Chad! Really great points! I'm not sure how to do a CCROI calculation since I will have gotten all my money back out on completion...in theory. I'm self-managing for this one, but long term will probably want to find a property manager.
Real Estate Agent · San Pedro, CA · Member since 2019 · 253 posts · 128 votes
3y
With BRRRR, because you're fixing properties up go get the best ARV possible, your refi loan amount and subsequent monthly payments will be higher than a traditional buy and hold. therefore we expect lower cash flow for BRRRR. If you can hold through market volatility in the current environment, much less cash flow than you're suggesting is reasonable. Just make sure you have adequate reserves. I'd take a "free" cash flowing property any day.