Hey everyone, I am having a hard time figuring out how house the BP calculators to account for the intricacies of har money loans. I want to be able to account for the cost of financing in the total deal to make sure it all works out. Does anyone have good tips on how to enter those numbers? For instance: A duplex that make 1900/month; costs of 150,000; needs 15000 in work; refi after 6 moths to conventional loan. Hard money terms are 9%; 2 points up front; payable in 8 months. Any thoughts? thanks everyone!
@Ryan Mills - using your example, of 150k purchase and 15k rehab, the all-in cost is 165k. Let's say HML gives you 85% of the total loan-to-cost (this number may vary, but can plug-n-chug accordingly).
85% of 165k is a loan of 140,250
2 points is 2,805 (140,250 *02)
At 9% Interest only, each month you will pay 1,051.87/m (140,250 *.09% = 12,622.50 interest for entire year. Take that 12,622 number and divide by 12 to breakdown from annual to monthly).
1,051.87 times how every many months til you refi.
Throw in the other closings costs and third party costs (appraisal, title) for BOTH the HML purchase and refi, and other holding costs like taxes, insurance, and utilities, and you have your total costs.
@Ryan Mills - Have you tried the BP Brrrr calculator? You can enter in your hard money and initial repairs info and also the refinance info.
@Tom Shallcross , thank you for your explanation of putting that all together. That does make more sense.I will play around with some different numbers and of from there.
@Zev Jankovic , I have used the BRRRR calc. I was just having a difficult time getting it all to work and understanding how the different numbers were accounted for. I will play around with it some more.
Thank you both!
@Ryan Mills - No problem. In the brrrr calculator - for the Purchase Loan Details you can enter in the HML interest rate, points, etc based on your HML terms (like interest only..). In the calculator you can select to refinance after 6 months. Then you can enter in the Refinance Loan Details. If you know you who you're going to refinance with you can get an estimate of terms from them to plug in to the calculator. If you're having a hard time entering in anything specifically from this just let us know.
@Zev Jankovic , thank you again. This is very helpful. I appreciate your taking the time to break this down!
@Ryan Mills - No worries! I hope it helps.