Critique my first analysis - looking for feedback to improve

7 Replies

Hey everyone, not sure if this will work properly, but I just analyzed a deal with the BRRR calculator and I want everyone's feedback. I'm going with: no this isn't a good deal, but I'd love to hear what others think. Please look at my estimates and tell me what I did wrong and where I can improve. I used the list price as the purchase price because right now I'm using this as practice.

You should be able to find the report here.

Thanks in advance

-Brian

@Brian Seggebruch I'm originally from Estes Park and I know the market your working in there if this unit is in the Collins area. Tough at best. I can tell you this. Disregarding all financing flaws or anything else you will never come out ahead renting a $300,000 plus property for $2100 a month. Something like that is usually an appreciation strategy of some sort. The problem with this one is it needs to be purchased at a way lower price to begin with. If you plug it into the flipper's calculator you will see its a poor candidate as a flip as well. In order for the brrrr to work you need a good property for a flip to begin with. The other thing you should be sure of first is that you use no estimates in your analysis. Insurance taxes ARV pm etc should all be hard verified numbers. It's good to practice though. Next time look up actual taxes get a real insurance quote etc. When I was looking in that area I had better luck with Evans Colo over by Greeley. I bet that market is pretty hard right now as well though. RR

Originally posted by @Antoine Martel :

Brian.

Seems like your loan amount is wrong. Most banks will lend you 70-75% LTV.

 Thanks for your reply! I appreciate the education.

Originally posted by @Ralph R. :

Brian Seggebruch I'm originally from Estes Park and I know the market your working in there if this unit is in the Collins area. Tough at best. I can tell you this. Disregarding all financing flaws or anything else you will never come out ahead renting a $300,000 plus property for $2100 a month. Something like that is usually an appreciation strategy of some sort. The problem with this one is it needs to be purchased at a way lower price to begin with. If you plug it into the flipper's calculator you will see its a poor candidate as a flip as well. In order for the brrrr to work you need a good property for a flip to begin with. The other thing you should be sure of first is that you use no estimates in your analysis. Insurance taxes ARV pm etc should all be hard verified numbers. It's good to practice though. Next time look up actual taxes get a real insurance quote etc. When I was looking in that area I had better luck with Evans Colo over by Greeley. I bet that market is pretty hard right now as well though. RR

Lots of great advice here, I appreciate it. I've got a lot to learn, which is why I posted this, so thanks for all of your tips. I got the property taxes from the MLS, so those should be correct.

Question: If in this market when houses are listing for an average of only 3 days before they sell, how do I have time to get real quotes for estimating costs? e.g. insurance, various rehab work, etc.

@Brian Seggebruch

Closing costs in Colorado are between 3% to 5%. Looks like you’re showing 1%

ARV doesn’t go from $277,000 to $330,000 with $10,000 in repairs. Especially if you’re going with rental grade supplies.

Originally posted by @Christopher Phillips :

Brian Seggebruch

Closing costs in Colorado are between 3% to 5%. Looks like you’re showing 1%

ARV doesn't go from $277,000 to $330,000 with $10,000 in repairs. Especially if you're going with rental grade supplies.

Thank you for your response. I have a lot to learn with regards to estimating ARV, so I appreciate your help. I'll continue to work towards making more accurate estimates.

@Christopher Phillips can you go into more detail about closing costs? Is the 5% both purchase closing costs, as well as selling closing costs? Seems like that would be a lot of money. 5% of the theoretical purchase price ($277,500) would be $13,875 in closing costs alone!

@Brian Seggebruch

Closing costs for the buyer include: inspection, appraisal, lawyer fees, title search, lender title insurance, origination and underwriter fees for the loan, processing fees for the loan, property survey, 6 months of property taxes, 12 months home insurance, and other misc. fees like tax service fees, recording fees, Fed Ex fees, flood certification, other local fees.

Broker fee if you're using one.

Plus down payment.

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