[Calc Review] BRRRR calc in Indy... Will you try your hand at it?

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*This link comes directly from our calculators, based on information input by the member who posted.


Disclaimer: This is all educational for me at this point. I have no intention of buying at the moment, just learning. Having said that:

My goal right now is to understand what kinds of projects would be good BRRRR opportunities that, in the end, would result in a cash out refinance that would make even a small fraction of extra money over the top of what I would have put into the deal.

When I saw this one, I first thought "this would be a great BRRRR analysis." Great neighborhood with higher property values, good schools, this is foreclosure so the price is reasonable. There's obviously some work that needs to be done. Low property taxes. I'm sure this will pencil out.... there does appear to be a fire station across the street though :(

But then I ran the numbers and not only does it garner negative cash flow, it also doesn't seem to hit an ARV that would allow a cash out refinance (70% of the ARV basically equals what I would have put into the deal... so I'd get my money back but nothing more)

I'm hoping someone with some experience in this area and who understands true reno costs could run their own version of this same exact report and see where you come up differently, if at all, and share the link to that report so I can compare side by side. DOES this actually work and I'm getting it wrong somewhere? I'd love to see where our numbers differ. THANK YOU!!

I am also just interested in learning. But sometime in the future I would like to actually buy. What all did you gather so far? You can pm me if you want to swap information. You may know some stuff that I don't and vice versa. I'm brand new to this whole thing.

Howdy @Jason Howell

Hope you are enjoying the Holiday.  I’m working. :(

The primary reason the deal is not working for you is you are not keeping your “All-in Costs “ within the 70%.  That not only means Purchase price and Rehab costs, but, it must include Holding and “All” Closing costs.

The only Holding costs you show are Property taxes and Insurance. These should be automatically transferred to the Rehab budget in the BP Calculator. Did you manually include other Holding costs in the Rehab budget? Utilities, HOA fees, etc. Acquisition loan payments (if you did have them) would automatically be included as Holding costs.

There are three possible Closing costs you always need to account for.  Acquisition loan closing at Purchase.  Any Hard Money Lender points/Fees .  And Refinance Closing/Fees.

For this deal the $1,950 cash remaining in the property comes directly from your Purchase Closing costs. To break even you would need a lower Purchase price or a loan with 75% LTV.

I assume you are disregarding the Cash Flow issue for the moment.

Does this answer your question?

John

Originally posted by @John Leavelle :

Howdy @Jason Howell

Hope you are enjoying the Holiday.  I’m working. :(

The primary reason the deal is not working for you is you are not keeping your “All-in Costs “ within the 70%.  That not only means Purchase price and Rehab costs, but, it must include Holding and “All” Closing costs.

The only Holding costs you show are Property taxes and Insurance. These should be automatically transferred to the Rehab budget in the BP Calculator. Did you manually include other Holding costs in the Rehab budget? Utilities, HOA fees, etc. Acquisition loan payments (if you did have them) would automatically be included as Holding costs.

There are three possible Closing costs you always need to account for.  Acquisition loan closing at Purchase.  Any Hard Money Lender points/Fees .  And Refinance Closing/Fees.

For this deal the $1,950 cash remaining in the property comes directly from your Purchase Closing costs. To break even you would need a lower Purchase price or a loan with 75% LTV.

I assume you are disregarding the Cash Flow issue for the moment.

Does this answer your question?

John

Our holiday was spent camping with the family! It was FANTASTIC... but it was also three days NOT spent analyzing and learning. But hey, we all gotta take a break some times. :) Sorry you had to work!

Yes, this was very helpful. In fact, you've been consistently super helpful and informative with my wall of posts in this forum the past few weeks, so I really thank you for sharing your insight. It's all a part of a Google doc I keep on the various topics to be referred to as I progress through this stuff. 

I think what I'm realizing (and really already knew tbh) is that using the MLS will make finding deals that fall under that 70% mark rather difficult... at least in the Indianapolis market. I could find deals through wholesalers perhaps... but I really think I will need to strike up a relationship with an investor-minded agent in the area that can tip me off to deals that qualify before hitting the MLS. Then maybe I'll be lucky enough to score some of those. More so than what I'm finding using the usual sites (Realtor, Trulia, Zillow, etc) for these number studies. But again, it's ALL part of growing and learning.

@Jason Howell

I couldn’t do this without my Realtor.  I don’t have the time right now to do the research.  My wife also is very helpful.  She drives different streets on her way home from work.  She looks for the distressed properties that I want.  Plus she’s a great people person.  Knows and talks to a lot of people about what we are doing.

Originally posted by @John Leavelle :

@Jason Howell

I couldn’t do this without my Realtor.  I don’t have the time right now to do the research.  My wife also is very helpful.  She drives different streets on her way home from work.  She looks for the distressed properties that I want.  Plus she’s a great people person.  Knows and talks to a lot of people about what we are doing.

Driving for dollars is something that feels too far outside my grasp. Living in the bay area, EVERYTHING is remarkably expensive, so even a "deal" around here is a huge outlay. I'm almost forced to do all of this outside of my market area and that means I will need to make that relationship with an out of state agent for those kinds of opportunities.