BRRRR Calculator Question

[Tim DeBellis]

I am a budding REI here in Santa Rosa, CA. I am transitioning from a 16 year career as a client service professional with a Big 4 consulting Firm and am now pursuing my passion of real estate. I am in the process of getting my real estate license and plan to have the real estate agent component provide me with income for living expenses while complementing that with real estate investing to build passive income and long-term wealth.

I am developing my initial investment strategy around multifamily (2-4 unit) properties to rehab/rent/refinance. I have played around with the BRRRR calculator and watched several videos on the use of the tool. As I gain more understanding of this process I question one aspect of the analysis and hope someone might have a perspective.

The calculator asks for income from rents and presumes the stated income is present over the full timeframe of the acquisition period before refinancing, say 12-18 months or so. However, it seems that during rehab, there is the potential for partial or no income for a few months while the rehab is taking place. In that case, it seems the analysis would overstate the potential returns as the actual income would be less. Has anyone run across this and if so, how did you account for this in the analysis of a potential property.

Thanks in advance for your thoughts and perspective.

Tim