Revised BRRRR outside of Raleigh

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I feel like I am missing something....I think this could be a decent first property in an area that is increasing in value and very close to downtown Raleigh. It needs some cosmetic love but HVAC and roof are new and it is single level, brick home 3/2. Thank you for any input :) 



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

@Ashley Rummage To be honestly, getting any SFH under 150k in Raleigh is very rare. Looks like yours would be in Garner, so that seems ok.

Here are some of the items that seems a little off on your report.

- 1300/mo rent in Garner for this type of property is a little too high, i would rather go with 1200/mo for the calculations.

- closing cost 8k? Should not really cost you more then 4-5k on 135k purchase

- downpayment should be at least 20% for investment property, your is about 15%

- 30 years amortized loan at 4.5% does not look like an investment property, so im guessing you are looking at the wrong loan or planning to live in it for a year?

- Also if you are rehabbing home, you won't have much repairs or at least should not have much repairs for few years at least.

- 5% vacancy seems a little too low as well, i would go with 15% to be on the safe side.

- Unless your 30k is cash, you will be also paying interest on that as well.

- 3 months fix timeframe is ok if you know what you are doing and depending on the amount of work, i would rather go with 6 months.

But overall it looks good. I have not seen the home and have no idea about the overall shape or the exact location though so just stating all this based on what you have provided. 

Also if the home is on septic tank and or well, would also add more cost and maintenance.

Hope this helps.

Jiri

Hi @Jiri B. - I cannot thank you enough for running through that and giving me your thoughts! Here are a few notes on top of your notes :)   

You are correct, it is Garner and a hop, skip, jump to DTR - I think with the right renovations and marketing I could get 1250 but am optimistic for $1,300 but you are right, let's be more conservative to be safe.

Closing costs include me paying an agent a fee for bringing me the deal..although CC may not be the right field for that. It is not clear yet if I will just add on to purchase price etc. Prob that way now that I think about the HUD

Coast CU qualified me for a 15% loan on a SFH investment property...I hope I am not missing something here

Def. not planning on living in it and I guess I wonder why not 30 years (I am GREEN so please forgive any elementary questions). I know a 15 would make monthly too high (I think)

The 30K is cash.

It would be flooring, popcorn removal, paint and new cabinets/appliances in kitchen, basic new light fixtures for 1,234 sq. ft.

City water/sewer thank goodness :)

Would love to get insight on the shorter loan aspect of it. The home was built in 1970 so def. older but single level, crawl, new roof and new HVAC which fits my criteria. I wish it were newer but I also know the big items are taken care of for now. Do you see any issues with the cash flow? My goal would be to have $300 CF a month but I am also really wanting to make something happen to get the wheels going and this opportunity is in front of me....

@Ashley Rummage Yeah, that makes sense. $300/mo seems a little optimistic but hey, even if that ends up $100 something else will still be paying your loans and the principle so I don't think you can't go wrong with that. Depending on how much PMI you would need to pay, you might as well just go with 20% down and not pay for that. Unless you can really refinance in 6 months and pull all that cash out, then it might be ok.

Personally i found it not worth it refinancing that early if i don't have to because it just cost too much in fees etc do that but if you need that money out, it might be worth it. But also remember once you do that, your cashflow will likely be gone.

1970 is not that old, but i would check for asbestos (especially in the popcorn ceiling). You also did not mentioned any bathroom remodels? I would guess those are original? You might be ok just re-surfacing it to make a little refresh. and if the cabinets and kitchen is in good shape, you might just get them painted, do a new laminate countertops and it will look like new and save you some $$$. I would just not go too crazy for this type of rental property.

Sounds like this might be your first investment so I would say if you are feeling good about it, go for it. 150k is a small risk to get started and the experience you get will worth way more in the long run.

Good luck!

@Ashley Rummage So you're putting $50k cash into it? $20k for down payment and $30k for repairs? Seems like a low ROI. I would think repairs will be less than $30k if that's all you're doing.

Why are you paying an agent a fee for bringing this to you? Is it not on MLS?

It's going to be tough to beat this COC in the Raleigh area, even on a flip in Garner. How far from DTR is this property? I have a SFH rental, technically in Garner, but its less than 5 miles from DTR. It's closer to DTR than some of the crazy expensive ITB neighborhoods like Mordecai, etc.

It has seen pretty remarkable appreciation over the past 5 years, so north garner may be a great niche relatively speaking in the Raleigh market.

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