FIRST BRRRR DEAL - Help me analyze this deal

6 Replies

This property needs Between $20k -$25k in Rehab. As an ARV of $155k - $170k. The owners tell me they bought it for $100k and they are in the middle of a rehab that they don't have time for.

Howdy @Justin Munk

There are a number of problems with this deal. First, remember to stay conservative. Go with the higher Rehab number of $25K. Use the low end of the ARV $155K. If you pay less in Rehab - you win. If the property appraises higher - you win. For the BRRRR strategy it is best to work your numbers backwards from the ARV and ending with the offer price. ARV x LTV % - Rehab Costs - Holding Costs - Closing Costs = MAO (Maximum Allowable Offer).

What type of property is it?  What is the current condition?  Is it currently occupied?

What kind of financing are you using for the acquisition?

Is this the current Rental Income or your estimate?  What are the Market rates?  Any room to increase?

You did not include a lot of expenses in your Cash Flow analysis. Vacancy, CapEx, Repairs, Property Management, any utilities.

As it stands this is not a good deal.

Good point on being conservative. 

It is s Single family home. Its in the middle of a rehab but good condition.  It is vacant

I have $34,000 cash and I will get a loan from the bank. 

Rental is $1000. I am thinking it will go for 1200. 

I included some expenses this time.

https://www.biggerpockets.com/calculators/shared/1015867/35c6c4f6-75f7-4f5f-a3cd-bdf0053c75a8?share_on_forum=true