[Calc Review] Help me analyze this deal. It could be #1!

[Clifford R Fowles]

View report

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

This is our first serious consideration. Our offer will go in this week. We have a HELOC to use on the purchase of the house then possibly hard money at 12% for the rehab (I used the loan fees section for that cost). Our insurance will be high because flood insurance will most likely be required since the property is in a flood zone. Any insight is greatly appreciated because I'm sure I've missed something.

[Michael Albaum]

Hi Clifford....a few things I don't understand about this. Is your HELOC truly at 2.5% amortized over 15 years? Most HELOCs I've seen are interest only and at a much higher interest rate, usually tied to market prime. Also, I don't see in here where you've accounted for your HML. Also, for your refinance calculation, it seems that you'll be refi'ing out 70% of the ARV, which shows $70K, but your into the property for $60K with the HELOC plus $25K with the HML = $85K plus fees. So my question is, does your after refi P&I payment also include HELOC payments? Since you'll obviously pay off the HML first, but that still leaves about $16k in outstanding loan from the HELOC.

Lastly, I don't believe that you would have $40K in equity as page 2 denotes. If the ARV is $100k and you're using 100% leverage to purchase and rehab for a grand total of $86K, then your equity position is closer to $14k. That's my take on this based on the report, but please let me know if I've missed something or misunderstood what your strategy is. Best of luck!