BRRRR IN INDIANAPOLIS

[Jason Malabute]

Hey guys, 

I need help. I'm trying to do my first BRRRR (2nd deal this year).

I have analyzing a lot of properties but I am having a hard time getting $200 cash flow per month AND at least 20% COC ROI.

Originally, I was using the following to analyze deals:

-$35k rehab cost (I use this number because that's how much I heard it typically cost to do full rehab on average on indy p1000 soft property if there are no main pipe line or foundation problems. We can't have a more accurate rehab cost until we send inspector and contractor to location) 

property tax =$100 per month (confirm with county)

-insurance= $70

vacancy= 8%

repairs =5%

Capex = 5%

PM fees =$97 or 10%

Should I change anything?

I've been talking to a lot of investors and everybody has their own thought of mind. Some people use 10% repairs and Capex, some people use 5% repairs and 5% Capex, some people use people use 0% cap ex because they already paid for the Capex upfront. Some people don''t use vacancy.

I'm getting confused they all do make sense.

What should be my default numbers going in when first analyzing the BRRRR deal before I send my inspector, contract, PM, and agent to property?

At same time I don't want be to be too conservative with my numbers because I want to close on this 2nd property (1st BRRRR) ASAP.

Again my criteria are $200 cash flow per month and 20% coc return at minimum.  

Please advise.

Thank you guys.

-Jason

[Andy Freeman]

@Jason Malabute You can spend all the time looking for a deal that meets the criteria, and then the rehab could come back way higher and the cash flow ends up being less than expected. Or you can go with something that has a little less cash flow on paper, and end up having things go your way, yielding better cash flow. Everyone wants a great first BRRRR, but even a base hit would be a good way to get things started. You'll establish, or further develop, your relationships with your agent/contractor/PM and there's a ton of value to that.