I am looking at a single family row home in Baltimore (21211) and just used the Rental Property Calculator.
Can anyone give me some feedback to see if I am missing anything?
A few specific notes/comments:
- We have $50k cash, so we're considering doing a hard money loan to minimize out of pocket costs so we can maybe buy 2-3 properties to rehab, refi, hold....is this unrealistic with $50k cash and credit cards for rehab costs?
- We have one person interested in living in the property to help manage day-to-day while renting other 2 rooms -- their rent will likely be discounted
- We would do a light rehab ourselves
A little better than 1% rule, but a hard money lender doesn't care about cashflow. They'll underwrite it as if it was a flip and would consider it a tight deal since they care about LTV and your cost (purchase + rehab) is 85% of ARV. Most HMLs will only lend up to 70% of ARV, so you just have to come up with a higher down payment. Your cash to close would be around $30k, and considering 6 months of holding costs and some money to start the rehab, I'd imagine you would need about $40k-$45k in total to get this deal done before you can refinance.
I'd recommend to start with one first before you do multiple, that way you get to experience the entire BRRRR first. The refi part gets a lot of people in trouble too. I'd recommend to get conventional financing lined up first to ensure that you can refinance before you put yourself in a hard money loan.
Also try using the BRRRR calculator instead of the Rental calculator.
@Nghi Le - Awesome insights, thank you so much. I found a hard money lender in Baltimore that does 90% LTV, 75% ARV, and 95% rehab. I will definitely use the BRRR calc instead of Rental calc, thanks again! I need to dive deeper into all the quick rules (eg 1% rule, 50% rule, etc) so I can truly have it as a reference when analyzing deals.
@Ray Johnson - Thanks for the warning on credit cards...definitely didnt think about the DTI ration impact on the exit. The transition from Hard Money to Refinance to Conventional is something I'm really worried about.
or you can get a credit card with %0 interest for 12 to 22 months
i think the citi simplicity i think %0 apr for 22 months
I don't know what you are buying in Remington, but even in Miles ave, people start asking too much money and most of houses that you would buy too small and need full renovations.
Asking 1800 could be high for rental depending on size of the house.
If you buy a 3 bedroom around Howard, then you can get 1800-2000 range easily.
But if you get 2 bedroom, then 1400 range is more realistic unless you do full renovation.
I would only try 2 houses with amount of cash you have currently.
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