BRRRR numbers question

[Vlad Kot]

Hi everyone,

The BRRRR strategy is something my fiancee and I are researching now, and we want to understand the whole picture before we take our first BRRRR. Basically, this question is about the very first step - doing math on a potential deal (ARV, purchase price, fees, all in cost and deciding whether it's a deal or not).

Any thoughts or feedback on the calculations below from someone with experience in BRRRR would be greatly appreciated. Also, if you can provide any real-life examples (with real numbers), I'd be glad to see them.

1. General input
List price 65,000 $
Estimated ARV 125,000.00 $
Estimated project length 3.00 months
Max purchase price 87,500.00 $ (ARV * 0.7)

Rehab cost 30,000.00
Purchase price 40,000.00 (see section 5 - it explains how it was calculated)

Purchase price + Rehab cost 70,000.00 $

Property taxes for rehab 285.75 $
Insurance for rehab 225.00 $

2. Hard Money Loan (HML)
HML terms 6.00 months
HML amount 70000.00 $; purchase price + rehab budget
HML interest rate 15.00 %
HML points cost 1,400.00 $
HML misc fees 1,500.00 $; some random fees from HML
HML holding costs 2,625.00 $
Closing costs 4,200.00 $ (6%)

HML money down 7,100.00 $ (points + fess + closing cost)
HML monthly payment 875.00 $/month

3. Cash-out refinance (FHA loan)
Loan to value (LTV) 80.00 %
Loan amount 100,000.00 $ (ARV*0.8)
Loan misc fees 3,200.00
Closing costs 3,750.00 (3%)

4. List all fees together

4.1 HML fees
HML misc fees 1,500.00 $
HML points cost 1,400.00 $
HML holding costs 2,625.00 $
Closing costs 4,200.00 $

Total 9,725.00 $

4.2 Conventional Loan fees (Cash-out)
Loan misc fees 3,200.00 $
Closing costs 3,750.00 $

Total 6,950.00 $

4.3 Other fees
Property taxes for rehab 285.75 $
Insurance for rehab 225.00 $

Total 510.75 $

4.4 HML fees + Conventional Loan fees + Other fees

Total 9725+6950+510 = ~17,200 $

5. Calculate purchase price

87,500.00 $ (Max purchase price)
- 30,000.00 $ (full rehab cost)
- ~17,200 $ (all fees)
= ~40,000 $ -> purchase price


6. Results
All In 87,185.75 $
Equity left in property 25,000.00 $

Cashback ~$12,815 $ 100,000 (Cash-out loan) - 87,185 (All in)

How does it look? Is anything missing here?