Possible BRRRR Help Analyze deal, please!

[Christian Bullen]

Forwarding this property as an example of how I could propose properties to you or other investors going forward, let me know what you think. Explaining where I want to go will help me at this point so please bear with me. My goal going forward is to invest in small multifamily properties in central Florida through the BRRRR (Buy,Rehab,Rent,Refinance,Repeat) Method. The key to success in this method is finding properties that can be sold at 75% (or lower) of market value because the seller is in a tight spot and needs the cash. Another key is to find properties that need significant work and can be fixed up to get their After Repair Value a lot higher.
Basically you pay for an underwhelming property at under value and offer cash for it. Then, after fixing it up you get an appraiser out there to determine the properties new worth. Once the property is valued significantly higher, you take a cash out refinance on the property, usually the bank will give you 80% loan of the properties new (After Repair) value.
As an example I've found a property in Holly Hill Florida. This is an off market deal so it is not on the MLS and I've spoken with the owner Steve regarding the situation of the property. The property is a duplex on I think .3 of an acre. It is two stories, one tenant on each floor. Each floor has 2 bedrooms one bathroom. This property already has tenants in it and they've both been in there and paying rent for 3+ years each. They each pay 800 per month on the property as it is without having any repairs done. so 1600/month cash from tenants, they want to stay for as long as possible there, and dont mind the rehab process. Just as important, Steve is only asking 125k for the property, while zillow and redfin estimate the property's worth at 170k, this is worth double checking with local realtors but I can guarantee 125k is far below market value. Even more so, if we offer cash on the property I think we could get the price even lower 105 or 110 i would hope.
I have driven by the property and can see it needs some landscaping, a new coat of paint, and probably some new kitchen appliances. Steve, the current owner, has said they replaced the roof 4 years ago, which is good, but I can't find any evidence of this online thru the county website, in fact, Steve isnt the registered owner, but im guessing he is doing his wife's bidding perhaps. I would guess 30k could be sunk into repair and would be a reasonable budget for repairing the property.
So the numbers should work like this and I've included them in the biggerpockets attachment.
Price: 110k

Repairs: 30k

Cash in: 140k

Rent: 1600 permonth

(AS IS, after repair could be raised, plus no vacancy, already has solid tenants)1600x12 = 19,200 peryear

Zillow and redfin estimate of property value is 170k.After repair value and and landscaping, paint, new appliances, etc. I believe the property could appraise for 185k (just a guess)
Remember, after appraisal we apply for a cash out refinance from the bank at this 185k property appraisal value. This cash out refinance essentially forms a new mortgage on the property that we paid cash for, but gives us cash in pocket to move onto our next property. They typically cash out 80% of the new value of the property... so 80% of 185k is 148k in cash to find our next property. This cash out process can be applied for a few months after owning the property.
The amazing this is if you look at the cash invested into the property including repairs it is 140k.
After the cash out refinance we will withdraw 148k from the property. This means that we have NO money into the property( in fact, plus 8k), and are getting straight cashflow from the solid tenants.
When we use the 148k to invest into a new property we pay no taxes on the money via something called a 1031 exchange.
The process can continue on and on and on into larger and better properties, more doors, and more cashflow every month, as we continue to control the properties and rent them out to solid tenants.
All of this hasn't even mentioned Real Estate market will continue to rise, as an example my grandparents bought a house in Rye new York 40 years ago for 75k, when they retired they sold the house for 950k and flew down to florida to enjoy the rest of their time. They lived in the house the entire time its just the market dictated the property as much higher in value.
If you apply this to a portfolio with 15 to 20 to 50 doors you start talking about serious wealth over the years. The market MAY go down, but as you know, the cashflow is what matters.

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I don't know if that link will work they are not letting me share my pdf file BRRRR calculator document with you without signing up for the pro membership on the forum... its like 400 bucks. anyway have a look at the property if you like on google earth or any other way of your preference. it is *******************, Daytona Beach FL 32114
I've attached a pdf format of the property as an investment with a traditional loan and not paying cash upfront. I prefer the cash method.
Anyways, thanks for reading let me know what you think and if this was easy to understand.
Thanks,Christian