Hardmoney for a BRRRR
Hi BP, I am trying to put together my first deal. I found a property and a hard money lender who is willing to fund the entire purchase with nothing out of pocket for me. I ran the BP BRRRR Calculator and the numbers seem off. I am getting a $5,775 monthly payment?
Hard Money Terms: 2yr, 4pts, 12% @ 65k or 1yr, 3pts, 12% @65k. I'm leaning towards the 1year so I can refi.
Do most hard money lenders require monthly loan payments?
Or should I ask for interest only payments and then a balloon payment when I refinance in 12 months?
Or is this just a terrible deal in general? I'm showing $650 a month in interest which is the entire income.
Tenant just signed a 12-month lease @ $650 rent and has been there for 5 years. (I would consider bumping it up to $750)
Thanks for wisdom and advice!
Most Popular Reply
Howdy @Chris Smith
What is the purchase price?
Rehab costs?
ARV?
Closing costs?
Estimate for Rehab time?
What type property? Sounds like a SFR. How are you going to do any interior work with tenant there?
Have you secured your refinance loan exit strategy? At least get pre-qualified for it.
What does your Cash Flow analysis look like? That means after the Rehab and refinancing.
This sounds like a difficult BRRRR to me. With a renter staying during the Rehab period makes it complicated. Can you meet the 70% rule? Purchase price, Rehab costs, Closing and Holding costs no more than 70% of ARV.