First Potential BRRRR Deal

[Kyle Wells]

I currently have two buy and hold properties with 5 units in total (1 SFR and 1 4plex). This is my first traditional BRRRR property. I would be curious to get fellow investor thoughts on this potential deal I plan to make an offer on today.

Purchase Details

Location - Kansas City, MO

Purchase Price - $67,000

Estimated Rehab - $25,000-30,000

Estimated ARV - $135,000 (as high as $145,000)

Estimated Holding Costs (includes hard money loan interest, property taxes, utilities, appraisal, inspection) - $7k

Total Out of Pocket - $20,400 (includes 20% down on purchase price and holding costs)

Hard money loan covers 80% of purchase cost and 100% of rehab costs.

Refinance Details:

LTV - 75%

Loan - $101,250 (this will leave us with $0-6,000 of our own money invested in deal including refinance costs)

Estimated Equity in Property - $28,000-33,000

Market Rent - $1,200

Estimated Monthly Cashflow - $200-225/month

Cash on Cash Return - 40% to infinite

[Beth Turner]

@Kyle Wells The numbers on this look good overall. My first question would be is this a SFH or MF? The reason for the question is what is cost per door. We try to get a minimum of $100 per door leaving no money in the deal and if this is a duplex or a SFH, the numbers look good.

The biggest points of failure when doing a BRRRR occur on the ARV and Rehab costs. If you are really solid in those numbers, the only other item to keep in mind is the re-finance generally cannot happen until 6 months after purchase. There are some lenders who can avoid the seasoning requirements, though make sure you find this out from your re-financing lender.

I am also an investor in the KC area, so feel free to reach out if you need any contacts for hard money lenders or re-financing lenders. Good luck!