Attempting First BRRR

[Brian Gallagher]

Good Evening,

I recently sold my first property and am trying to rough out some numbers to execute a BRRR strategy with the proceeds. At this time, I am looking at two different multi-family properties in the Cleveland area and would appreciate any advice I can get.

Property 1:

Side-by-side duplex, 1,300 SF units w/ 3 beds, 1.5 baths each. Decent bones but needs new A/C for each side, new roof in the next 5 years, and upgraded finishes. I will do about half the work and hire out the rest. B class area, family-friendly neighborhood.

Purch Price: $140,000

Est repair costs: $45,000

ARV: $215,000

Est Rent: $2,300/mo

Est. Cash flow: $1,275/mo

Property 2:

Traditional up-down duplex, 1,100 SF units w/ 3 beds 1 bath each. Someone attempted a rehab but ran out of money halfway through. Roof/siding/windows have been replaced, just needs a new driveway and finish the kitchens and baths. Again, I will perform a lot of the work myself. C-class area, but in a trendy, up-and-coming neighborhood.

Purch. Price: $72,000

Est. Repair Costs: $40,000

ARV: $150,000 (with a lot of opportunity to appreciate down the road)

Est: Rent: $1,700/mo

Est. Cash Flow: $900/mo

In either scenario, I am planning on using conventional financing with 20% down and fund the repairs w/ cash. My numbers are pretty tight for Property 1, and it is possible I would need to use a HELOC if I have any overruns. My cash flow numbers only include mortgage, insurance, taxes, routine repairs, and vacancies as expenses (I will manage and maintain the property myself). I plan on holding either property for about a year after rehab to build up some cash before refinancing. Just wanted to get some input on whether I am on the right track with my numbers, and get some opinions on which would be a better deal. My analysis says that Property 1 has better cash flow, but Property 2 has more potential.

Thanks,

Brian