Cash out Refi numbers

Multi-Family and Apartment Investing
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Cash out Refi numbers

Emily Rolando
Member since 2018 · 11 posts · 2 votes

Can you help me understand what a cashout refi would look like here and how to think it through? 

This is a house hack property where Id be living in it building out the basement and renting the upstairs for $2,300 while doing so, then a roommate when the bottom is finished. Im getting a traditional mortgage instead of hard money straight off the bat so I don't have the pressure of a high interest loan, I'll be using a primary residence mortgage and generally want a back up if I cant cashout refi for some reason. 

Purchase price: $515,000 

10% down= $51,500

Loan= $468,135

Rehab = $35,000

ARV (estimate) 600,000-625,000. Lets go with 615,000

How does the rest look to you and why? Here is where I think I might be going astray. The BURR calculator didn't help me learn the analysis and I couldn't understand if I would indeed be able to take any money out or end up with over 100000 of my money in the deal (which I do not want).

Thanks!

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  • Grant Thompson
    Investor · Washington, D.C · Member since 2019 · 113 posts · 93 votes
    4y

    Hello Emily,

    There is a quick and easy way to estimate if a deal is a complete BRRRR. The formula is,

    Purchase Price = 0.7 * ARV - Rehab Costs (some use 75% instead of 70%)

    In your case, in order to pull all of you money out of this deal you would need to purchase the property for 395.5k. With the current numbers, you will likely need to leave some money in the deal assuming you refi with an 80% LTV loan option.

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  • Emily Rolando
    OP
    Member since 2018 · 11 posts · 2 votes
    4y

    Thanks Grant. Can you take it one step further for me as this is the exact spot Im stalling out. How much (if any at all!) could I pull out with numbers as is? If purchase price stands, am I looking at leaving the downpayment and repair value all in the deal just increasing my cashflow to refi at 80% LTV and out of Mortgage insurance?

    What would numbers look like to refi at least some, say the repair value of 35K out and leave in the initial 10%? How do I calculate and play around with those numbers?

    Thanks!

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