Springfield, IL – BRRR Analysis

[Andrew Fernquist]

Hey folks,

Not yet familiar with the Springfield area, but wanted to see if anyone had thoughts/suggestions on the analysis of the following BRRR deal: https://www.realtor.com/realestateandhomes-detail/...

This is a side by side duplex, one side currently rented, one requires repairs and rehab. There is still more due diligence to be had here, but trying to get in the habit of good analysis practice to aid in future deals. 

Asking Price: $23,900

MFR: 1/1 on each side

** Will need more information on current rent and rehab costs, but median 1/1 rents are $550 for the area according to rentometer

Offer Price (~4k below asking): $20,000

Rehab Cost (est.): $25,000

Closing Costs (est.): $3500

Total Cash Invested: $48,500

ARV: $57,000

Rent after Rehab (combined): $1000

Expenses:

Property Tax: 30 / month ($350 / year)

Insurance: $17 / month ($200 / year)

Vacancy at 5%: $50

Maintenance & Repairs at 5%: $50

Trash: $15

HOA: $0

Gas & Electric: Tenant Paid

Water & Sewer $75

Misc: $0

Property Management at 10%: $100

CapEX at 5%: $50

Total Monthly Expenses:  $387

M&I after Refi @ 80% of ARV (45,600): $245

Monthly profit after refi: $368

CoC (after refinance): 9.2%

Questions I'm hoping for some help with:

1) For hard money loans, do you typically pay interest only until the term of the loan is up when the remainder is due? If that's the case monthly payments on a 12% hard money loan of $45k would be around $430 / month over 12 months. This would still make the deal cash flow positive once renovation is complete on the vacant side.

2) Any thoughts on the above analysis? I know it's messy – I've tried to clean it as best I could but appreciate any help or feedback :)

3) Any other tips, tricks, or suggestions for this deal? From my math it looks like one that would be worth looking into further (neighborhood due diligence, more pictures of the vacant side, etc.), but would love to solicit some other thoughts.

Thanks!

Andrew