Updated almost 8 years ago on . Most recent reply
Help with deal analysis?
Hi all,
I am hoping somebody can help me. I have looked at a number of properties over the past couple months on and off the MLS and have not found one that fits my buying criteria until now. Could somebody help me in analyzing this deal, is this a good deal?
As a preface, this will potentially be my first Real estate deal :-)
I am looking to do the BRRRR strategy.
Property is as follows.
3 beds 2 baths 1,120 sqft
sale price: $62,000
4 comps range from $60-$87 within a 1/2 mile radius.
Rent Estimates within a 2.76-mile radius, courtesy of Rentometer: Average $893 Median $895.
| Purchase Closing Costs: | $1,500.00 |
| Estimated Repairs: | $5,000.00 |
| Total Project Cost: | $68,500.00 |
| After Repair Value: | $75,000.00 |
| Down Payment: | $15,500.00 |
| Loan Amount: | $46,500.00 |
| Loan Points: | $465.00 |
| Loan Fees: | |
| Amortized Over: | 25 years |
| Loan Interest Rate: | 4.500% |
| Monthly P&I: | $258.46 |
Total Cash Needed
By Borrower:$22,465.00
| Monthly Income: $895.00 | Monthly Expenses: $718.56 |
| Monthly Cashflow: $176.44 | Pro Forma Cap: 6.96% |
| NOI: $5,218.80 | Total Cash Needed: $22,465.00 |
| Cash on Cash ROI: 9.42% | Purchase Cap Rate: 8.42% |
Thanks in advance for your help.
Most Popular Reply
As you have it structured now, it doesn't work as a BRRRR. With an ARV of $75k and being all in at $68k, you won't be able to refinance enough to get your money back so you will be left with at least $12k of your money in the property. Also, traditionally, banks won't lend for rehab, so how are you planning on purchasing the property? It looks like you are using traditional financing numbers. You also need to account for vacancy and repairs by reserving money every month. On this specific property, probably about $250 per month. As you have it now, it's not a BRRRR candidate, in the traditional sense.