Updated almost 7 years ago on . Most recent reply
[Calc Review] Help me analyze this deal
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Heys guys, I am new here but loving all the tools and systems in place. I own a single family house out right. It is worth about 125K. It has renters and I'm trying to decide if it is worth keeping or selling and using the money in other ways. I have put it in the BRRR calculator but am not really sure. It appears that the income is the most determining factor. Right now it rents for $875. So do I just keep adjusting the Refinance amount to get the cash flow I want. Thanks in advance. I look forward to growing with you guys. David
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@David Smiley, I wouldn't want to go more than 80% LTV and prefer 75%. There may be special cases where I'd go higher, e.g. big value-add opportunity with owner financing or using a HELOC on a BRRRR deal. The goal in either case would be to get to 75-80% LTV after stabilizing the property.
The lower the LTV the higher your cash flow (should be). This can distort the deal though. If you put 50% down it will look like you have great cash flow, but what you've really done is buy that cash flow with a big DP.
Typically, I'm interested in property that cash flows $150-200/unit/month at 75-80% LTV. Then I consider ROI. A $2MM 4-unit that only cash flows $600/month is not a deal I'd do, even though it meets my criteria above. I like to see cash-on-cash ROI in the mid-teens or above. I should note that the markets where I focus are not great appreciation markets. There are several dials to tweak when you're analyzing a property.
Let me know if you have any other questions. But, seriously, sell that house.