[Calc Review] Help me analyze this deal

5 Replies

Just need to get started and make sure I understand how all of this fits together.

Tear me up here.  Let me know if I'm being unreasonably conservative or what.  I don't mind constructive criticism at all.

Thanks in advance!!

Cliff Mitchell

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

Hi @Cliff Mitchell just without getting too deep into the expenses used, I quickly noticed two things:

1) how are you planning to finance the acquisition? Most banks and mortgage brokers have a minimum of 50k.

2) Refinance period of 24 months? Typically banks require a seasoning period of 6 or 12 months. No need to wait longer to refi. Also, the refinance would give you a cash out of 70-80% of ARV. Assuming an ARV of 100k is correct, your new loan would be for 70k-80k. Which would bring down the principal and interest and therefore, more cashflow.

Hope that helps!

Assuming post repairs the units would be rented, I am not sure I would account for the utilities which might give you more cash flow. I am assuming however the tenant will pay these fees. 

Or am I wrong? 

These is great feedback thanks!!  I'll make the adjustments and re-run the numbers and then re-post.

I'm planning on using a heloc on my primary residence to get this funded.

Bear with me.

Thanks again,

Cliff

Howdy @Cliff Mitchell

Good start on your analysis. Is this a SFR or Multi family?

Your Repair and CapEx amounts are a little light for my taste. Are you doing a complete gut job on the Rehab? Probably not for only $20K. Therefore, I would assume there are some major components or appliances that will need replacing/repairs in the near future. Unless you have the property inspected to determine the current condition and life expectancy. You can not know for sure. I like to maintain 12% - 15% combined or no less than $2K per year. It again depends on the age, condition, and type of property.

The rest of your numbers look good.

BTW if using a HELOC there is no Down payment. Just the full purchase price for the loan amount.

Also did you include Holding Costs in your Rehab estimate? These include (but not limited to) mortgage payments, insurance, taxes, utilities, HOA fees, etc. that occurs during the Rehab period and up until the property is fully rented. Once fully rented the tenants cover these costs.