Updated over 5 years ago on . Most recent reply
BRRRR Gone SO Right!
BRRRR deal gone so right!
Single Family
4 Bedrooms, 2 Full Bathrooms at purchase
Asking: $75,000
Purchase Price: $42,500 Cash
Rehab: $70,000
Closing & Holding Cost: $5,000
Total Cost: $117,500
Projected Appraisal: $125,000
Cash-Out Refinance LTV: 85% ($106,250) leaving $11,250 in the deal
Appraisal: $142,000
NEW Cash-Out Refinance LTV: 85% ($120,700) taking out all capital invested as well as pocketing $3,200.
5 Bedrooms, 2 Full Baths After renovation
Cash flows $600 per month
This deal turned out to be great thanks to that extra appraisal amount and my conservative ARV I was shooting for. Income approach came in at $144,000!
Most Popular Reply
@Nathaniel J Mott Real estate math is pretty simple if you have a calculator. First find the ARV (after repair value) or what it would likely appraise for. You can do this by asking a realtor to give you their opinion of the value (BPO) or you can use Zillow to look at comparable that have sold recently that are roughly the same condition as the property you are buying or the condition the property will be in after you finish the rehab. Then times that amount by .75 on the calculator. That will give you 75% of the value of the property. Then subtract estimated closing costs of maybe a couple thousand dollars for a cheep property or a little more for a more expensive property. Then subtract estimated holding costs and the estimated repair costs. Then that leaves you with how much you can offer for the property if your goal is to do a BRRRR on the property.
For example
100k - ARV
X .75 = 75k
- 3k for closing costs
- 10k for repairs
- 3k for holding costs
- 2k for closing costs on the original purchase
= 57k asking price
I hope that was helpful for you.