Basic numbers for preliminary analysis of a BRRRR property

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Basic numbers for preliminary analysis of a BRRRR property

Curt Bixel
Rental Property Investor · Columbus OH (columbus, oh) · Member since 2020 · 143 posts · 71 votes

I am looking at properties online.  I am looking for long term rental properties in the Columbus, Ohio area that I can purchase at a discount, so I am willing to do substantial rehab.  My plan is to look at hundreds of properties and narrow that list down to a much smaller list that I can really dig into and research.

Given that goal, it would be quite helpful to have some general numbers that I can use for my calculations.  Currently I am using:

Vacancy = 10%

Repairs = 10% or 5% in case a full gut rehab was done.

Management = 10%

Capital expenditures = 10% or 5% in the case that a full gut rehab was done.  

Rehab is certainly more difficult.  Can't even expect to get a good number there until getting into the place and taking a look at it.  Even then, any estimate would still be very rough until an experienced GC actually came and took the time to give an estimate.  That being said, in order to narrow a list of hundreds of properties down to a reasonable number to visit, it would be good to have some starting numbers.  Can I get some feedback on the following?

Older Home (before 1940) (Think Clintonville)

  • Full gut, rehabbed as a rental = $70 per square foot.
  • Moderate (kitchen and bath) + light other, rehabbed as rental = $30 per square foot.
  • Light rehab - $15 square foot.

Newer Home (after 1950) 

  • Full gut, rehabbed as a rental = $60 per square foot.
  • Moderate (kitchen and bath) + light other, rehabbed as rental = $20 per square foot.
  • Light rehab - $10 square foot.

Water = $25 per bedroom per month

Taxes - check comps on auditor's website

Rent = Rentometer.com

Any feedback would be much appreciated.  Especially feedback specific to Columbus.  

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Remington LymanBusiness Member
Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
6y
Originally posted by @Curt Bixel:

I am looking at properties online.  I am looking for long term rental properties in the Columbus, Ohio area that I can purchase at a discount, so I am willing to do substantial rehab.  My plan is to look at hundreds of properties and narrow that list down to a much smaller list that I can really dig into and research.

Given that goal, it would be quite helpful to have some general numbers that I can use for my calculations.  Currently I am using:

Vacancy = 10%

Repairs = 10% or 5% in case a full gut rehab was done.

Management = 10%

Capital expenditures = 10% or 5% in the case that a full gut rehab was done.  

Rehab is certainly more difficult.  Can't even expect to get a good number there until getting into the place and taking a look at it.  Even then, any estimate would still be very rough until an experienced GC actually came and took the time to give an estimate.  That being said, in order to narrow a list of hundreds of properties down to a reasonable number to visit, it would be good to have some starting numbers.  Can I get some feedback on the following?

Older Home (before 1940) (Think Clintonville)

  • Full gut, rehabbed as a rental = $70 per square foot.
  • Moderate (kitchen and bath) + light other, rehabbed as rental = $30 per square foot.
  • Light rehab - $15 square foot.

Newer Home (after 1950) 

  • Full gut, rehabbed as a rental = $60 per square foot.
  • Moderate (kitchen and bath) + light other, rehabbed as rental = $20 per square foot.
  • Light rehab - $10 square foot.

Water = $25 per bedroom per month

Taxes - check comps on auditor's website

Rent = Rentometer.com

Any feedback would be much appreciated.  Especially feedback specific to Columbus.  

If you are getting 10% vacancy in Clintonville you should fire your property manager and hire @Mitch Deminski or @Peter Lohmann

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  • Daniel Judge
    Rental Property Investor · Columbus, OH · Member since 2019 · 131 posts · 183 votes
    6y

    Personally, I've never liked that the BP calculators have repairs and capex being a percentage of the rent. I would instead think about a whole dollar value that you think you'll need to set aside for maintenance (a common number I see thrown around on here is $100 per door) and capex (I've seen estimates of $180-200 for a typical SFH) each month and then adjust the percentages used in the calculators to get near that designated value.

    Your PM percentage seems reasonable to me. Vacancy rate seems to vary by the neighborhood, but 10% seems like a reasonably conservative numbers for most neighborhoods that I've looked at.

    Re: taxes, I would also factor in whether your property taxes might take a significant jump if you're doing major fixes and the property value is reappriased by the county (especially if you're pulling permits).

    Still learning myself, so take all of the above with a grain of salt and best of luck with your search!

    2Reply
  • Austin Steed
    Real Estate Agent · Columbus, OH · Member since 2016 · 593 posts · 664 votes
    6y

    @Curt Bixel

    I agree with @Daniel Judge on this. The BP calculators take capx and r and m based off of the rents the property receives. I'm not sure I agree with diluting the positive affects of cash flow by getting more rent.

    All of the rentals that I own in Columbus I try to keep it $50-75 a door per month. We try and take very detailed accounting so I'm hoping I can see an average over some time.

    2Reply
  • Austin Steed
    Real Estate Agent · Columbus, OH · Member since 2016 · 593 posts · 664 votes
    6y

    @Curt Bixel

    Another thing to keep in mind is tax adjusting. The Franklin County auditor makes this pretty easy in Columbus. You can put your projected land and improvement value and it spits out the new tax amount.

    Also don't forget turnover rates. Does any one have a solid turn rate calculation?

    Obviously the more turns you have the more r and m are affected.

    1Reply
  • Michael Reisman
    Columbus, OH · Member since 2019 · 78 posts · 66 votes
    6y

    I would check more sights for rental income estimates like zillow and craigslist in addition to rentometer. I would also suggest contacting a few local property managers for help with various estimates as they should know the areas pretty well.

    1Reply
  • Curt Bixel
    OP
    Rental Property Investor · Columbus OH (columbus, oh) · Member since 2020 · 143 posts · 71 votes
    6y

    @Daniel Judge yeah, I learned that lesson about the taxes going up.

    Years back I had a property go from $700 per year to $3500 per year. I had not even fixed it up yet.

    Took me from positive cash flow to negative cash flow for years. Expensive lesson.

    I am on bigger pockets to see if I can learn lessons like this a bit more vicariously. :)

    1Reply
  • Curt Bixel
    OP
    Rental Property Investor · Columbus OH (columbus, oh) · Member since 2020 · 143 posts · 71 votes
    6y

    @Austin Steed

    Austin, does 75 per door mean 75 per unit per month?

    1Reply
  • Austin Steed
    Real Estate Agent · Columbus, OH · Member since 2016 · 593 posts · 664 votes
    6y

    @Curt Bixel

    Yes sir

    1Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    6y
    Originally posted by @Curt Bixel:

    I am looking at properties online.  I am looking for long term rental properties in the Columbus, Ohio area that I can purchase at a discount, so I am willing to do substantial rehab.  My plan is to look at hundreds of properties and narrow that list down to a much smaller list that I can really dig into and research.

    Given that goal, it would be quite helpful to have some general numbers that I can use for my calculations.  Currently I am using:

    Vacancy = 10%

    Repairs = 10% or 5% in case a full gut rehab was done.

    Management = 10%

    Capital expenditures = 10% or 5% in the case that a full gut rehab was done.  

    Rehab is certainly more difficult.  Can't even expect to get a good number there until getting into the place and taking a look at it.  Even then, any estimate would still be very rough until an experienced GC actually came and took the time to give an estimate.  That being said, in order to narrow a list of hundreds of properties down to a reasonable number to visit, it would be good to have some starting numbers.  Can I get some feedback on the following?

    Older Home (before 1940) (Think Clintonville)

    • Full gut, rehabbed as a rental = $70 per square foot.
    • Moderate (kitchen and bath) + light other, rehabbed as rental = $30 per square foot.
    • Light rehab - $15 square foot.

    Newer Home (after 1950) 

    • Full gut, rehabbed as a rental = $60 per square foot.
    • Moderate (kitchen and bath) + light other, rehabbed as rental = $20 per square foot.
    • Light rehab - $10 square foot.

    Water = $25 per bedroom per month

    Taxes - check comps on auditor's website

    Rent = Rentometer.com

    Any feedback would be much appreciated.  Especially feedback specific to Columbus.  

    If you are getting 10% vacancy in Clintonville you should fire your property manager and hire @Mitch Deminski or @Peter Lohmann

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
    Reafco512 Reviews
    WebsiteView Page
    3Reply
  • Dominic S.
    Investor · Visalia, CA · Member since 2016 · 5 posts · 7 votes
    6y

    @Curt Bixel

    Based off the information that I'm getting from my agent, we are expecting to spend 80-100k on a major rehab for a duplex built before 1940. We are making offers on properties now and expect to have some real data from bids once we get under contract on a property. If those numbers are close, then I think $60/sf may be a touch high albeit conservative.

    Dominic

    0Reply
  • Robert EllisBusiness Member
    Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
    6y
    Originally posted by @Curt Bixel:

    I am looking at properties online.  I am looking for long term rental properties in the Columbus, Ohio area that I can purchase at a discount, so I am willing to do substantial rehab.  My plan is to look at hundreds of properties and narrow that list down to a much smaller list that I can really dig into and research.

    Given that goal, it would be quite helpful to have some general numbers that I can use for my calculations.  Currently I am using:

    Vacancy = 10%

    Repairs = 10% or 5% in case a full gut rehab was done.

    Management = 10%

    Capital expenditures = 10% or 5% in the case that a full gut rehab was done.  

    Rehab is certainly more difficult.  Can't even expect to get a good number there until getting into the place and taking a look at it.  Even then, any estimate would still be very rough until an experienced GC actually came and took the time to give an estimate.  That being said, in order to narrow a list of hundreds of properties down to a reasonable number to visit, it would be good to have some starting numbers.  Can I get some feedback on the following?

    Older Home (before 1940) (Think Clintonville)

    • Full gut, rehabbed as a rental = $70 per square foot.
    • Moderate (kitchen and bath) + light other, rehabbed as rental = $30 per square foot.
    • Light rehab - $15 square foot.

    Newer Home (after 1950) 

    • Full gut, rehabbed as a rental = $60 per square foot.
    • Moderate (kitchen and bath) + light other, rehabbed as rental = $20 per square foot.
    • Light rehab - $10 square foot.

    Water = $25 per bedroom per month

    Taxes - check comps on auditor's website

    Rent = Rentometer.com

    Any feedback would be much appreciated.  Especially feedback specific to Columbus.  

     I like the BP calculators and i think they are very useful. just make sure the inputs are about right. for multifamily deals in columbus i like to keep expense ratios around 42%. that expense ratio is really form larger apartment complexes. i think the 50% rule is too high. especially if you talk to commercial appraisers that sell 10+ units you will see the expense ratio they use 

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    2Reply
  • Mikael Winkler
    Rental Property Investor · Columbus, OH · Member since 2015 · 344 posts · 258 votes
    6y
    Originally posted by @Curt Bixel:

    @Daniel Judge yeah, I learned that lesson about the taxes going up.

    Years back I had a property go from $700 per year to $3500 per year. I had not even fixed it up yet.

    Took me from positive cash flow to negative cash flow for years. Expensive lesson.

    I am on bigger pockets to see if I can learn lessons like this a bit more vicariously. :)

    Yeah, this just happened to me on a property. Purchased in 2017 and yearly property taxes were around $1200. Now, they're over $3000. Luckily, we were able to get in really lower comparatively for the area, so we had a solid cashflow buffer. But, never fun to lose that few hundred dollars in cashflow. 

    I have heard you can protest an increase like this, but I'm not positive. I'll find out on my next property, as I'm focusing on appreciating areas.

    0Reply
  • Curt Bixel
    OP
    Rental Property Investor · Columbus OH (columbus, oh) · Member since 2020 · 143 posts · 71 votes
    6y

    @Mikael Winkler

    You can protest, and if you do, you are actually quite likely to get a very small decrease in your taxes.  I have been successful in getting them reduced by 2-5%.  Several times.  Not sure if it is worth the hassle.  I don't really spend my time with this anymore.  

    0Reply
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