Help! is this a good deal? My first BRRR

[Emily Wilson Litzinger]

Hi friends,

So I own several rentals and they're all cash flowing nicely. Now I'm ready for my first BRRR. When I started I didn't know about Bigger Pockets but now that I do, I've got myself in knots trying to analyze deals on the calculators. But I'm having an issue with one deal in particular bc it doesn't make the 2% rule and now I'm nervous. Normally, I just multiply my rental income by 12, minus yearly expenses and divide by the total price of the house. Which would put me at 14% and I'm happy with anything over 12%. But like I said, I use the BRRR calculator and now I'm not so sure I know what I'm doing.

The property is 67,500. 

Total budget: 79,550.00. 

ARV: conservatively 105,000.00

Rent: 1275.00 

Is this a good deal?

thanks in advance for taking the time. 

[Kenneth Garrett]

@Emily Wilson Litzinger

Here is how I approach the BRRRR strategy. If I can recoup all my money within 24 months my return becomes infinite after that 2 years. That's a 50% CoC return. I essentially have a property that didn't cost me anything. Yes I have a mortgage, but I also have equity. My first BRRRR I was able to recoup all of my out of pocket expenses in 12 months. Knowing all of your numbers are essential. ARV, rehab amount, market rent, refinance terms and approval are critical. I did not mention purchase price because if the other numbers fall in place the purchase amount will take care of itself. BRRRR is a package deal. All those pieces must be part of your plan. If it works it works.

Good Luck.