First Deal (BRRRR) - Duplex
Hey BP fam,
Brand spankin new to the forums. We're looking at a duplex that would seem to be a candidate for BRRRR. It needs work, and is not appropriate (not enough beds) for us to live in (house hack) ourselves with 2 small kids.
I'm trying to analyze this property, but I just don't think I have the right information to complete the analysis. Where can I begin to fill in the details, and if you have any advice, I'd love to hear it. I'm using the BP (BRRRR) calculator, and here are the details:
Neighborhood: The houses (older and smaller) in the area are between $90 - $140K, ranging from $75/sqft to $90/sqft. The yards all look well kept (nothing fancy, just clean and establishd).
--- PURCHASE INFO ---
Price: $25K (this is what's listed, but I assume I would adjust this based on rehab work needed)
Basic Details: 1184 sqft, 0.37 acres, carpet/tile flooring, vinyl siding, concrete slab, public water, needs work inside (unsure of how much at this point, just looks like it wasn't taken great care of)
Units: Two units...1bed/1bath
Year Built: 1953
Sale History: 1991 ($43K), 2005 ($50K), 2017 (foreclosure, surprising)
ARV: Unsure (zillow shows $89K, but what do they know?)
Purchase Closing Cost: Unsure
Estimated Repair Cost: Unsure (should I get a contractor in to look at it and estimate?)
Refinance After How Many Months: Unsure (I assume this would be based on the rehab time?)
Estimated Rehab Time in Months: Unsure (no experience here)
--- RENTAL INFO ---
INCOME
Rent: Estimating (need to ask) $545 per unit, so total $1090
FIXED LANDLORD-PAID EXPENSES
Monthly Insurance: Unsure (no experience here, but I know my own home's insurance...if I use basic math to convert the sqft'age, it'd be $310 a year, something tells me this is not the best way to calculate)
Property Taxes: $1808 (as of 2015)
Water & Sewer: Unsure (I know what MY water usage is...unsure of what the tenants would use)
Electricity: Unsure (same as above, how do you guys estimate?)
VARIABLE LANDLORD-PAID EXPENSES
Vacancy: 5% (I've read to use this %)
Repairs and Maint.: 5% (I've read to use this %)
Capital Expenditures: Unsure (I'm not even sure what this field is for)
Property Mgmt: 10%
FUTURE ASSUMPTIONS
Annual Income Growth: 2% - saw Brandon Turner use these numbers in a webinar, unsure here.
Annual PV Growth: 2%
Annual Expenses Growth: 2%
Sales Expenses: 10%
Any advice or guidance is much appreciated. We really are brand new to this, but I am not letting my ignorance stop me, even though I'm hearing my conservative side saying, "you don't know this stuff, this is too hard."
-Chris