Updated over 8 years ago on . Most recent reply
2/1 Deal Analysis (First time investor)
First time investor here looking for some input on a SFR buy and hold property. I am looking to use the BRRR strategy on this property. I am using private money to fund the deal and would repay once the refinance portion is in place.
2 Bed/1 Bath
Offered: $21,000 all cash, no inspection contingency
Closing Costs: $1,500
Taxes Current Year: $1,800
Needed rehabs(Estimated):
- Fix grade issue $300
- Demo and remove patio $500
- Demo and remove moldy drywall in basement $150
- Repair basement cracks/seal/paint $500
- Dehumidifier $300
- Paint interior $300
- Paint Exterior $200
- Add/repair downspouts $500
- Replace boiler $3,000
- Replace siding on carport $400
- MISC Electrical $350
- MISC/Oversights $1,000
TOTAL Rehabs: $7,500
ALL IN TOTAL: $31,800
Comparables in the area are around 45k-48k on average. Some upwards of 56k. Market rent is conservatively $750/month but I would likely target a rent of $800/month. A craigslist search turns up many "renovated" 2/1 houses at $800-$825/month rent. After getting unit rented and refinanced, here are how the numbers should shake out:
Looks to be about $158 cash flow per month. However, as stated, I would target an $800/month rent and I would also manage the property myself so the numbers should look even better.
Thoughts?
Most Popular Reply
It seems like a lot of your renovation costs are materials only (like the painting). I assume you're doing this yourself. For analysis purposes, I wouldn't do this. I would cost it out as though you are hiring someone to do it for you. If the deal still works, then by all means, go ahead and do the work yourself if you can. The point is that your time is worth something, and don't give it away for free when you're making calculations to see if a deal is worthwhile.