BRRRR Analysis Assistant

[Yishi Pan]

Hi BP Community and Investors,

I'm looking at a property to brrrr invest and wanted some advice on proposing an offer. Here are the details as follows:

1. Asking Price: 120k needs TLC

2. Comparable Market Analysis ARV average (most recent sold in past 6 month): 240k

3. Repair cost: 100k - 150k, haven't inspected and might have more surprises work included: interior gut job down to studs and exterior window/doors/siding/roof

4. Holding cost:  Property tax 200/month; insurance 170/month; Utility (Property vacant) 80/month; Other cost 80/month

5. Renovation period 6 - 10 month 

6. Refinance after stabilized with tenant in 12 month

7. Market rent after project complete is $3740/month 

What is the max offer that I should offer to use hard money for this project or is it even possible?

I've also consider to finance through bank with construction loan; wondering how that typically works? I'm from Canada.

Appreciate any feed back, Thanks!

 

[Guifre Mora]

Originally posted by @Yishi Pan:

Hi BP Community and Investors,

I'm looking at a property to brrrr invest and wanted some advice on proposing an offer. Here are the details as follows:

1. Asking Price: 120k needs TLC

2. Comparable Market Analysis ARV average (most recent sold in past 6 month): 240k

3. Repair cost: 100k - 150k, haven't inspected and might have more surprises work included: interior gut job down to studs and exterior window/doors/siding/roof

4. Holding cost:  Property tax 200/month; insurance 170/month; Utility (Property vacant) 80/month; Other cost 80/month

5. Renovation period 6 - 10 month 

6. Refinance after stabilized with tenant in 12 month

7. Market rent after project complete is $3740/month 

What is the max offer that I should offer to use hard money for this project or is it even possible?

I've also consider to finance through bank with construction loan; wondering how that typically works? I'm from Canada.

Appreciate any feed back, Thanks!

 

 PASS with capital letters!

You are missing closing costs to the purchase and loan if financed. Also if financed you need the monthly payments in the holding costs.

Look at it very simplistically. 120,000 (purchase) + 3,600+ (closing Costs) + 5,300+ (holding costs) + 130,000 (rehab) = 258,900. ARV 240,000.

A good rule of thumb is Purchase+rehab= 65-75% of the ARV.

Good Luck