[Calc Review] Help me analyze this deal

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Could anyone explain to me why CoC goes down when I reduce the time to refi. This seems incredibly counterintuitive to me since less time with hard money would mean less cash in the deal so higher return, no? Also, would I really need to show up to the hard money lender with $50 grand? I am just trying to wrap my head around this brrr strategy and how to actually make it work. Any help would be much appreciated!

You might as well buy turnkey with those small returns. You will need to show up with around 20% of the total purchase price plus 20% of repair costs. With 6k in points, 50k sounds right. But this isn't a good deal.

Additionally, thinking that a REFI will happen in a month isn't realistic. 40k of repairs is quite a bit and there is a 6 month seasoning period with most banks.

Take a second look on your expenses. The repairs and CAPEX need to be higher. Make sure you can find a PM for 9% before dipping that low, etc. Which effectively brings the cash flow to nothing. There is alot of risk with little to no return.

Originally posted by @Frank Geiger :

You might as well buy turnkey with those small returns. You will need to show up with around 20% of the total purchase price plus 20% of repair costs. With 6k in points, 50k sounds right. But this isn't a good deal. 

Can you please explain why I would need to bring 20% down and 20% of rehab to a HM lender? I have not yet spoken directly with a lender yet but I was under the impression that with the market where it is, getting a HM loan with low down is quite doable.

Any thoughts on how to make this a better deal?

Really my goal here is to determine the profitability of my market and how much I should be offering to buy homes in my direct mail campaign for the area. I'm willing to accept that this may just not be a great submarket at the moment, but only after thoroughly looking into it.

A HML wants the investor to have skin in the game. The lowest you will find is probably 10%. But as a new investor, expect more like 20%-25% of all in cost. It isn't a low downpayment method because they know you can't get a traditional loan with the bank and properties in this condition have much more risk. Also, their lending will depend on the appraisal for the ARV.

@Frank Geiger that makes a lot of sense. I recalculated with private money and it turns out to be a pretty sweet deal. So now just to find some pm! Thank you for the advice and information!

Brenden, the acquisition loan amounts appear incorrect. What I've seen most people do is fund the purchase and rehab with a hard-money loan, with an interest rate of 9-12% and 6-12 months of interest-only payments, followed by a balloon payment of the principal balance at the end of the term. Amortization doesn't come into play here, because a) you're making interest-only payments, and b) there's that balloon payment I mentioned.

Here, you've set an amortization period of 1 year, meaning you're paying off the full $169k over 12 months.  That's why your monthly P&I is so high, and why your monthly cash flow is so low.  That monthly P&I figure of $15,090 includes both principal and interest, which is why it's so huge.

The goal of BRRRR is to fund the deal with the kind of loan which is friendly toward rehabs, and then refinance out of that as soon as possible (since those loans are relatively expensive). This refinance only takes place after completing the rehab and getting the property appraised at the new, (hopefully much) higher value.

Try revising your analysis so that the purchase loan is interest-only for the same 12 months, and see what happens.  Also, assume it'll take you more than 1 month to rehab.  I have no idea what improvements you have in mind, but I agree with the comment above that $40k implies a much larger scope of work.  Try 3, 4. and 5 months as a series of experiments, and see what that does to your calculator output.

Hey @Richie Thomas ! First off, thank you so much for the input! I knew there was something I was getting wrong because quick calculations in my head were not matching up at all with what the calculator was spitting out. The calculations and numbers make much more sense to me now. My issue was just lack of knowledge with the specifics of the hard money aspect there and how this is properly put into the calculator. 

And I 100% agree that one month rehab is unreasonable. I was just trying to change all kinds of numbers and figured if I still could not get a decent return at this mythical 1 month rehab time there was definitely something up.

I now have all the numbers right and the cash flow and ROI look much more realistic. In fact that ROI kind of blows me away. Guess that's the power of BRRR investing!

Thanks again!