First BRRRR deal (hopefully)
I've read so many BRRRR threads that I hope I have a handle on this and ready to do my first deal. Would love input.
- $46k cash on hand.
- 2/1 ( could be 3) SFH offering $30k in recovering, popular neighborhood.
- Rehab cost $20k
- ARV is $70k
The plan:
- Use HML (12.75% 15yr, 20% down, 1% per $1k upfront fee, 1%/balance early payoff fee inside 1 year,) Initial purchase = "approx" -$24,000 (incl $6k down).
- My cash for the rehab. = -$20,000
- Appraisal = -$400
- total in- $44,000 ($26,000 mine)
- Rent ASAP $800/mo (approx $2400 net for 6 months)
- In 6 months, Refi 70% of ARV = $49k
Questions:
- Am I crazy for taking the 12.75%? Is there a better way? My thought for keeping more cash on hand was a safety net because it being my first deal. In addition, the traditional bank I've used on to 2 other deals seemed a little timid of my strategy. So, I went to somebody who was willing to do it.
- doesn't this scenario put me back where I started with my cash in hand?
- Is it possible to do a home equity immediately after rehab to cash out early? What are the details of that route? (Cost, rules etc).
- Other thoughts? Things I'm missing?
*please excuse any errors in the math. It's late. ;)