Flip or BRRRR
I am closing on a 3 bed 2 bath home in Nampa, ID that will be my first flip or BRRRR. Originally it was going to be a flip as the rehab will be super light and I thought it would make a great first attempt at fix and flip.
It is $329,000 and after just paint and a few cosmetic touches (no more than $10,000 total), I was going to list it at $400,000 with confirmation from my realtor that things are moving quickly in this price point. With closing costs, housing costs, agent commissions, my HELOC costs, I estimated about $20-$30k profit, depending on sale price.
But, now I am thinking this would be a great BRRRR to learn those ropes as well! I would much rather add a property to my portfolio.. Since this will be a cash buy, do I need a seasoning period for a DSCR refi? Is 7% a good rate to use for projections? If it appraises for $400,000 and I take out 80% I will only have $20-$25k in the deal. This property could rent for $2,400 and the PI at 7% is $2,128. So, likely break even at best.
Thoughts? I know its not a huge spread but like I said I wanted to try something new.
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- Residential Real Estate Investor
- Kansas City, MO
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7% is probably good for projections, but I would ask whatever bank you're planning to go with where they're at and factor in an extra 0.25% to be safe. And yes, it would need to season, usually 6 months to a year after you close. (Again, ask the bank.)
These days I lean toward flips (which is unusual for me) but if the numbers show it cash flows all in with a 7% loan, then sure. BRRRR would be a good way to go.