Question about running BRRRR calculator with HML

[Charles Mitchell]

Hi all,

So I've been running a bunch of deals to familiarize myself with markets and the systems and ran into a bit of a hiccup. I plan on using a HML for the property I buy. The issue is there is no place to input HML so I'm worried im doing it wrong. Below is a break down on how I've been inputting the numbers. Keep in mind I'm going to keep this as basic as I can to not cause confusion. Numbers will also be made up for simplicity.

Purchase price: 50,000

ARV: 150,000

Closing costs: 3,000

Estimated repair cost: 50,000

Purchase loan Details

Down payment of purchase price: 0% (no down payment as HML funds the deal)

Loan interest rate: 11.99%(What ive been quoted by an HML)

Points charged by lender: 0 (points are charged but I want to keep it simple

Other charges from the Lender: 0

The issue that I'm running into is that the calculator is not factoring the repair costs into the HML. Am I doing something wrong or should I just be adding the repair costs into the purchase price?

Thanks for any and all help!

[Adam Gollatz]

Hi @Charles Mitchell, I dont use the calculator on here, so I cant offer guidance specifically on that, but its a fairly easy calculation. First let me start by asking how you plan on refinancing out of the HML and what those terms are? I will also need your anticipated carrying costs until you are able to rent out and refinance.

As for the math its simple. You can roll the HML lender fees into the different cost areas, or total it all up into its own "lender fee" line item. In the end it doesn't matter as long as its accounted for. Below I rolled them into closing and carrying costs.

50k purchase + 

50k rehab + 

3k closing (this is probably where your HML points will go if you pay them upfront, so adjust accordingly) +

3k refinance (just my no effort estimate, run with the numbers from the lender who will do your refinance) + 

carrying costs (monthly interest, taxes, utilities, interest on the HML loan * # of months held)

= some number once you fill in the blanks. Just make sure this number is less than the LTV percentage the lender will refinance or you will be leaving money in the deal.

Feel free to message me if you want to talk more about the specifics.