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Hello everyone. I have been looking to buy my first BRRRR property, but I do not know if I am reading the numbers correctly because I am so green. Can someone look at this and let me know what you think about it?
It appears that based on your numbers this isn't a BRRRR. The quick and dirty formula for a BRRRR is
Purchase price = 0.75 * ARV - Rehab Costs
In your case, you would need to acquire the property for ~$156.25k to make it a complete BRRRR deal.
Side note, rehab costs are very hard to estimate so make sure you verify that estimate and/or allow for a significant margin of error in your calculations.
Thank you for that. I originally did my calculations with the rental calculator, but I was having trouble getting the numbers I needed. I plan to pay cash because I basically need to to make the deal happen. The home is almost turn key, but needs some minor touch ups that I estimate will be about $5,000. I then want to refinance because I do not want to keep the money in the home. What calculator would you suggest I use?
@Rick Sepulveda , the ideal BRRRR would allow you to refi out all of your capital, which is what I believe Grant is referencing. But, if you are buying, renovating, renting, refi'ing and repeating, you are BRRRRing, regardless of the amount that comes out of that refi.
That being said, I am more concerned about your assumption that putting $5,000 into the property will result in the $35k value increase you have in the calculator. $5k will get you a new appliance set, or a whole interior repaint, but not much more. So unless you have an insider track on this property and are buying below market rates, I would assume $180k + 5k will be worth somewhere between 180 and 185k on the open market.