First time investor [Calc Review] Help me analyze this BRRRR

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First time investor [Calc Review] Help me analyze this BRRRR

Nicole Skorka
Property Manager · Denver, CO · Member since 2019 · 30 posts · 13 votes

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


Would you do this deal?  This is a condo in the Denver metro area that needs full rehab. New kitchen, bathroom, flooring throughout, as well as cigarette smoke mitigation.  The rehab estimate is between $40-$45k.  Rental inventory in Lakewood is slim, so the demand it there, but market doesn't show any 2/1 units over $1900 currently.

My agent believes the ARV will be $325k. The plan is to cash-out refi and hold long term.

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  • Brian Fiorillo
    Investor · Denver, CO · Member since 2019 · 41 posts · 29 votes
    4y

    @Nicole Skorka,

    congrats on making the leap into REI! Posting your calculator results on the BP forum is a great way to get feedback. Here is what I'm seeing:

    Your report currently shows you refinancing out the full property value. Unfortunately, most lenders are only going to allow you to refinance at 25%-30% LTV, which means if the properties ARV is $325,000, you'll only be able to refi $227,500-$243,750. Lets assume you're working with a lender that will refi at 75% LTV. Based on the figures you inputted into the calculator, you'll actually be leaving roughly $47,500 in the deal.

    It also seems you didn't allocate a line item for CapEx. Maybe because you figured the HOA will cover large items like roof and siding? However this line item covers much more than that. Think large expenses like appliances and mechanical equipment.

    I hope you don't mind, but I took the liberty to regenerate the calculator so you can see the true figures on this deal. Based on what I am seeing, this may not be a property you want to pursue as an investment. When it's all said and done, your ROI is less than 1% and your cashflow is $22. Again, not accounting for any funds being allocated to CapEx.

    Keep trying and don’t be afraid to ask questions!

    All the best,

    Brian Fiorillo

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