Hello BP Family!
Gotta love the "Related Forum Discussions" tool. As soon as you think you have a novel concept, its there waiting to let you know someone has done it before haha. Which is actually good because I got a chance to see how someone else tackled this problem.
At any rate. I was faced with the challenge of presenting my investors with a breakdown of how the BRRRR strategy looked. From my side and theirs. So after about 15 hours of work and 4 cappuccinos. I've developed my take on the BRRRR calc. Compared to the other calc I looked at that someone posted I believe mine gives a lot of the "behind the scenes" actions that go on.
I spoke with Brandon Turner about this and he suggested throwing it out to get some community feedback! Its all very simple calculations in Excel. Addition, subtraction, multiplication and division. Please have a look if you have the time! Any and all feedback would be greatly appreciated!
Here is the link - https://www.biggerpockets.com/files/user/SamV411/f...
Thanks in advanced!
Updated almost 6 years ago
Looks like a pretty straight forward proforma. Why not add an IRR calc?
Thats an interesting thought @David Jacques . What additional information do you think I would need to add that to my calculator?
just add a tab with your monthly net cash flows and enter in an IRR calc i.e. =XIRR(cash flow range, date range) The XIRR function allows you to calc your IRR on a monthly (or daily or weekly or whatever) basis.
Interesting. I haven't used that function before. How would that information be different then the Cash on Cash ROI or the total Project ROI? From the description (and my brief googling haha) it sounds like the NOI broken down for a period. (I.e. if NOI = $1200, then the IRR for 3 months would be $300.) Am I understanding that right?
@Sam Valme undefined, A few things that I noticed looking over your spreadsheet. First, It appears as though many of the =SUM functions can be removed as they are not adding to the function and removing them might help it to look a bit cleaner.
Second, in your "Project Details" tab, you have accounted for 12 months for all of your calculations but in the "Account Checkpoints" tab, you have the project ending at 15 months. You may want figure out which is the more accurate timeline and then adjust the others.
Next, is the issues of the private lender. First, is it a correct assumption to assume that the private lender will be charging you 0% interest on the $42,000 loan? I get that they will be benefiting from the points but I think a 0% interest rate is a bit unrealistic. Now with the points, they should be included in the acquisition costs since they will need to be paid upfront and not when you refinance. This adjustment will tweak your numbers a bit, both in calculating NOI and necessary starting cash reserves.
With investor ROI, you are subtracting the "Lender Profit" twice by subtracting it in the "Investor Project ROI" calculation and adding the "Investor Refi Cashout" which also subtracted it for its calculation. But in both cases the "Lender profit" should not be in either calculation (see above). Even so, with the "Investor Project ROI" you are adding the refinance twice, once as the cashed out portion and once as the equity portion. When your refinance and cash out, you are effectively liquidating the added equity and cannot include it in the calculation of ROI.
Also, after your refinance you are increasing your mortgage payment $500 a month or so which will bring your monthly ROI to -$300 barring a large increase in rental income. Unless the repairs are adding another bedroom it would be very difficult to increase your rent $500 a month, and that is just to stay at the previous cash returns.
@Sam Valme: Did you ever update your excel file with any tweaks or additions?
Bump, @Sam Valme any updates to this spreadsheet? I'm always looking for someone else's work to plagiarize and consume for my business :)
For anyone waiting - the BP team actually made this calc! :) you should be able to find it on the site.
Aloha BP Fam,
I was hoping the Airbnb calculator would be more like the BRRRR calculator, but its just a link to AirBNB site.
is there anyway to add on Variable expenses to the BRRRR calc's like in the Fixed expenses?
I'd like to factor in by lines... things like GET and TAT taxes here in Hawaii.
thanks for your time,