BRRRR Advise

[Andrew Valdez]

1700sq ft. Duplex. It rents out for 850$ ea side = $1700 Gross ~~~~CAsh Flo of $588 p/month

This is my first investment property. I'm 21 and super excited but extremely nervous!!

I have it under contract for $150k + Closing Cost($5-7k)[not big fan of the closing cost] so far I have no hard money invested.

During our due diligence we found a lot of moisture damage to the flooring due some leaky sinks and water heater and I personally think neglected maintenance. We just got quoted for $5k for repairs.

but the buyer wants me to go half on the repairs ($2.5k) so my loan now totals 159.5k(pending) but the buyer also said last time he refinanced it got appraised for $170k. 

In my reading I feel like I'm not going to have any equity to start the snowball effect. 

Is my logic correct? Any suggestions? Comments?

Correct me if needed and Ask if you {want/need} more information

Thank You

[Dave Hurt]

@Andrew Valdez good advice given thus far regarding the LTV. How are you acquiring the property? It sounds like hard money so I would caution you to make sure you speak with a conventional lender to be certain you'll be approved for the refi - you don't want to get stuck holding a hard money note and not able to refi out. Based on the appraisal you should be acquiring closer to 125k to get your money back out (and really that is what I would shoot for if I were acquiring with all cash - don't forget the cost of hard money - points up front, etc.).

If you are set on pursuing this deal, I would go back to the seller and ask for a reduction based on what you discovered during DD...I definitely would NOT split the cost of repairs with such a thin deal already. Remember you make your money when you buy, and buying a property worth 170k for 160k using hard money to attempt the BRRRR strategy just won't work.

Good luck!!