Deal Analysis - Fourplex in KC

[Lawrence H.]

Hi BP family,

Just got my first investment under contract in KC and super excited! Wanted to run the numbers with you guys to double check I'm not missing anything. It's a fourplex in the Ivanhoe Northeast area... a bit of an up and comer but some similar homes in the $280 - 340k ARV range. It's made up of two 2 bed 1 bath and 2 1 bed 1 bath.

$170k purchase price + $55k rehab = $225k. With hard money lending fees, holding costs, closing costs, refi fees, penciling to around $245k. With a $280k - $340k ARV, we're coming out anywhere between 86% ARV to 70% ARV when we refi (will likely not get a perfect BRRR unless we hit the high end of the ARV range).

After rehab, the rents seem to fall anywhere from an average of $700 - 800 a room... pointing to around $2,800 - $3,200 a month, getting us close to a 1% rule depending on ARV. With a rent of $2,800 to be conservative, we're thinking around $252 / month for property manager, mortgage of $1.1k off a 5-6% commercial loan, insurance of $115 a month, taxes of 1.1% or $257 a month, and maintenance of around $115 a month (may be high since we'll rehab it). This is giving us around $1k a month off of the 4 units.

Would love for you guys to beat my numbers and assumptions up on this. Anything I'm missing? Does this sound like a good deal to you?

Best,

Lawrence

[Evan Bolender]

Not sure as to what the extent of your rehab is, but it would definitely be prudent to underwrite some CapEx in there (in addition to repairs) if you plan to hold long-term.

If you expect the current roof has 20 years left of useful life and expect it cost $10k to replace, I would tack on $500/year for just the roof alone ($10,000/20 years), which equates to $41.7/month. There are obviously more CapEx items besides just the roof that I would apply the same methodology to.

Other than that, best of luck to you should you pursue this deal!