Please : some opinions on my first attempt at a BRRR - Newbie

Please : some opinions on my first attempt at a BRRR - Newbie

New to Real Estate · Chino Hills, CA · Member since 2017 · 3 posts · 0 votes

Hi friends. Newbie here. Reading and reading and trying to soak it all up from all of you.

Need sincere advice on my first investment. Here is the info:

-Foreclosure for $85,000, 3 Bdrm 2 Bath, 1200 Sq feet, Lot 7,000 sq ft, detached 2-car garage,1945 built.
(Roughly $80/sqft price)

-Small town with 12,000 Population. Good schools, nice clean town.
-Taxes $600/year, no HOA

I will put down 20% ( $17,000) and do some basic fixes ( maybe carpet and paint total about $4,000)

Rents appear to average at $900-$950/pm. Snowfall is 60inches annual.

The BP calculator had me at 20% cash on cash and $420 positive cashflow. I assumed a 10% vacancy and 5% repairs. I assumed $3,000 closing costs

My main fear is not being able to rent it. 

Would really welcome any feedback, to avoid me getting myself in a mess. ( I also live in another state, so I would need to fly in. I'm hoping to self manage(no prop management company). There is a small Airbnb opportunity due to hunting in the area, but I would think a good long-term renter is the goal.

Thanks in advance.

-Mike

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  • Investor · San Francisco, CA · Member since 2015 · 302 posts · 206 votes
    6y

    2 things stick out to me

    1. "maybe carpet and paint total about $4,000"   I would be very careful assuming this is all it's going to take. 

    2. You left out ARV. (After repair value) Do you know or can you project what that will be? You need to find out a realistic number for that. Besides the purchase price and the repair costs that ARV is super important.  You need to figure that a lender will lend 70% of that ARV and work backwards from there to see if you are paying too much or if your projected repair costs are too low. 

  • New to Real Estate · Chino Hills, CA · Member since 2017 · 3 posts · 0 votes
    6y

    @NicholasLohr

    Thanks very much for the insight.
    I saw that a year or so ago it sold for $130k, and now is at $85k.
    I will be careful not evaluate about fix costs, once I can get better pics from the listing agent

    Could I use the last sold price  and Foreclosure price difference plus the cost to repair( out of my pocket, as cash, not loaned) as a measure of AVR? Say $110k is my AVR ?

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