Charlotte, NC · Member since 2015 · 9 posts · 4 votes
Something doesn't seem to add up, any ideas? I'm assuming an initial hard money loan, ARV of 120k, 75% refi and cash flow after refi shows -96/mth. Rent may be a little conservative, it could be 950 and rehab is also conservative. Thanks for your feedback everyone!
@Christopher Smith Even at $950 the rent wouldn't meet the 1% rule. Pre rehab you have a vacancy of 5%. I calculate it at 100% rehab of 6 months then refinance at 6 months not likely. will have to season loan 6 months so 6 months rehab / total time 12 months before rehab= 50% vacancy. You can finance at 30 years. Your capex and repair budget of $1000 per year is low. I think this should be a pass.
Looks like a good deal from the refinance and cashing out with extra cash perspective. To @Tim Herman's point, your vacancy should be higher. What is the age of the house and the major systems (how much are you going to rehab)? If newer, then the repair and capex may be ok, but most likely will need more set aside. So, cash flow not great on a monthly basis, but initial chunk of extra cash may be worth it.
I like this deal, because there is a lot of room in the ARV. If your ARV comes out low (or even if it doesn't) maybe take out a little smaller loan to make it more cashflow positive. If it appraises for what you expect, you have a ton of equity you could potentially tap later OR just hold as cash reserves in case the property cash flows a little negative. The key will be to be disciplined with your cash reserve. Like others have said, looks like it could also work as flip. Good find!