Counting every cost

[Kristen Owens]

I'm looking to purchase my first property.

Goal is to use the BRRRR strategy, but I want to make sure I am counting all the costs accurately. Please tell me if I am missing anything!

Purchase price, down payment, rehab cost, holding costs during rehab, appraisal for refi, cost to refinance out of hard money loan?, new mortgage payment... what am I missing?

[Michael Dumler]

@Kristen Owens, closing costs (escrow/title fees) for both the initial purchase and refinance. 

[David Abbate]

Capex and maintanence for one.

I've heard for decades growing up that expenses are the most common thing screwed up by investors/landlords. Screwed up as in, underestimated.

[John Chong]

Closing costs on your HML. Taxes and insurance on the refi.

[Ned Carey]

@Kristen Owens you don't have any cost for managment of the property once it is an up and running rental but I am assuing you are just asking about the ultimate ready to rent cost of the property. 

You have most of them excepta couple already mentioned. The problem is it is easy to underestimate. Insurance cost for example will be much more expensive for a "Builders Risk" policy.  Remember utilities and taxes while holding. The contractor will open the widows i the winter to let paint fumes out but will turn up the heat all the way. The opposite happens in the summer.

Property taxes may go up due to your renovations and reassesment. 

[Andrew Postell]

@Kristen Owens I love using the BRRRR Method. It's how I've acquired most of my properties. But if this is your first property, why aren't we trying to buy our primary home?

[Kristen Owens]

we are in our primary. This will be my first rental property. Thank you for your response!

[Andrew Postell]

@Kristen Owens ah, very good.  Only 4% of Americans own 2 homes.  You are 1/2 way there!

[Kristen Owens]

I did not know that! That is baffling to me considering people's homes are usually a substantial part of their net worth. It just makes sense to invest in real estate. Interesting!