[Calc Review] Help me analyze this deal

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  • Hiromi Gonzalez
    New to Real Estate · Orange County, CA · Member since 2026 · 40 posts · 28 votes
    7mo

    Nice BRRRR setup! The bones of this deal make sense (buying at $170K, forcing $200K in equity through rehab, pulling cash out). But I think there are a few expense gaps in the calculator that change the picture pretty significantly.

    Property taxes aren't showing up. Norfolk's real estate tax rate is $1.23 per $100 of assessed value. Post-rehab, the city is going to reassess this at or near your $370K ARV. That's roughly $4,550/yr or ~$379/mo. That's a big line item that isn't in either the pre- or post-refi expense columns. (The $250 "Misc" line can't realistically cover both taxes and insurance.)

    Insurance is also missing. For a rental property in Norfolk (coastal city, hurricane exposure) landlord insurance is going to run $200-250/mo at that ARV. That's another line item not accounted for.

    If you add those two back in, post-refi monthly expenses go from ~$2,897 to roughly $3,500. Against $3,300 in income, that flips the deal to about -$200/mo negative cash flow instead of +$403.

    The refi LTV might also be tight. The report assumes a $300K cash-out refi on a $370K ARV, that's ~81% LTV. Fannie Mae caps cash-out refis on investment properties at 75%. At 75% LTV, the max loan would be ~$277,500. Good news: that lowers your P&I payment to about $1,754/mo. Bad news: you'd have roughly $15-20K still in the deal instead of $0 out of pocket.

    With the lower refi amount AND the missing expenses added back in, the monthly picture is roughly break-even which honestly isn't terrible for a BRRRR where you've forced $90K+ in equity. But it's a different story than the +$403/mo the calculator is showing.

    None of this kills the deal, it just means the real return is coming from equity capture and appreciation, not monthly cash flow. Worth stress-testing the rehab budget and ARV before committing.

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  • Cy WaldronPro Member
    OP
    Member since 2020 · 4 posts · 0 votes
    7mo

    Thank you for all your insight and knowledge.  I will adjust and negotiate a better price and sharpen my reno budget. 

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  • Alex Wright
    Investor · Cody WY, USA · Member since 2020 · 50 posts · 31 votes
    7mo
    Quote from @Cy Waldron:

    View report

    *This link comes directly from our calculators, based on information input by the member who posted.

    I ran this through my model and it really looks like this deal depends on everything going right. Which personally scares me.

    On paper it still cash flows (~$450/mo), but the margin is pretty thin once you’re into the refi

    DSCR is around 1.2, so there's not a ton of room for:

    • rent coming in lower
    • refi terms shifting
    • or rehab going over

    IRR gets a little funky here because the exit is negative — it's basically telling you the deal doesn't produce a meaningful return under those assumptions.

    What stood out more to me was how sensitive it is to small changes. Even just "mild" takes it down.

    doesn't take much for cash flow to drop off and DSCR to get uncomfortable pretty quickly

    feels like one of those deals where it works, but only if execution is really tight across the board. Personal pass for me, but if you have a solid system, and aren't scared of risk, it works... 

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